Sprint rips GTE-Bell Atlantic merger

Tuesday, July 28, 1998 | 2:05 a.m.

NEW YORK -- In the latest mega-combination to transform the telecommunications industry, Bell Atlantic Corp. and GTE Corp. announced today a $52.9 billion deal that would create the second-biggest telephone company behind AT&T.

The merger would combine Bell Atlantic's dominance of local telephone services from Maine to Virginia with GTE's unique offering of both local and long-distance services to mostly rural and suburban areas scattered across the nation.

The addition of GTE would enable Bell Atlantic to crack the long-distance market, but initially only in GTE areas.

The combined behemoth would have 63 million local telephone lines in 38 states and revenue of $53 billion. Only AT&T, once it completes its planned acquisitions, would be bigger.

The Public Utilities Commission of Nevada is among the regulatory agencies that will review the proposed merger, since GTE has local telephone service in Northern Nevada.

A spokesman for the PUC said the commission expects to receive formal notification of the merger and will be asked to make a determination how it would affect local customers.

GTE operates about 32,000 lines in Douglas and Lyon counties, providing local service to business and residential customers in Minden, Yerington and Gardnerville.

Bell Atlantic has no holdings in Nevada.

Sprint, the dominant phone company in Southern Nevada, criticized the deal.

"Today's announcement of a proposed merger between GTE and Bell Atlantic is another slap at consumers," said Sprint's J. Richard Devlin, executive vice president, general counsel and external affairs. "Rather than opening local markets to competition as required by the Telecom Act of 1996, the telephone monopolies are merging to become even more stifling and powerful.

"This latest horizontal merger would further the trend of monopolistic consolidation of telephone lines into the hands of a few companies, depriving consumers of the opportunity for competitive choices, higher quality service and lower prices," he said.

GTE's top executive, Charles R. Lee, will be the new company's chairman and co-chief executive officer. Bell Atlantic CEO Ivan Seidenberg will be president and will share the CEO title with Lee. The companies said the deal would generate cost savings of $2 billion within three years without significant job cuts.

While Bell Atlantic is using its stock to pay for the transaction, the deal was described as a merger of equals in which the new board of the combined entity would be drawn equally from each company.

The Bell Atlantic-GTE merger comes on the heels of a series of major transactions that are transforming the way companies market and sell telecommunications services, from local phone service to Internet access.

A federal law intended to force more competition in telecommunications has touched off a spate of attempts by the industry's biggest players -- not all successful -- to buy their way into each other's businesses.

Current laws put severe limits on Baby Bells' ability to sell long-distance service, but the companies are preparing for the day when they are allowed to get into the potentially lucrative business.

Today's deal would be the fourth-largest merger ever and the No. 2 telecommunications deal, after SBC's purchase of Ameritech.

The deal secures Bell Atlantic's place as the largest U.S. local phone company after SBC's merger with Ameritech threatened to topple it. Bell Atlantic, itself the product of a merger with Nynex, another Baby Bell, owns some 40 million phone lines in 13 states in the Northeast and mid-Atlantic.

GTE, based in Stamford, Conn., is the third-largest local phone service provider in the United States after Bell Atlantic and SBC with more than 21 million local phone customers in 28 states, mostly suburban and other less-populated areas.

It also is a seller of long-distance service in all 50 states and has a big presence on the Internet due to its acquisition last year of BBN Corp., which operates regional computer networks and offers services for businesses such as dial-up access, consulting and hosting of World Wide Web sites.