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August 18, 1997updated 03 Sep 2016 4:25pm


By CBR Staff Writer

Bell Atlantic Corp says it will be the first local carrier to enter the US long distance market after officially closing its $25.6bn merger with Nynex Corp on Friday. That is despite predicting it will not be offering its joint 26 million customers long-distance services until next summer. According to Bell Atlantic, the process of gaining Federal Communications Commission permission for the merger has given the company a head start on winning a long-distance license from the commission. Last month, in a pre-emptive move to gain FCC backing for the merger, Bell Atlantic and Nynex proposed a ten point list promising it would give competitors entering its telecoms region a fair deal as well as the ability to have complaints dealt with directly by the FCC. We will be the model for all companies to follow. And we will not be going to court [over the Telecommunications Act] but will work with the existing laws, said Ray Smith. According to Bell Atlantic, the new company’s combined market accounts for 50% of all the international calls started in the US and the regional long distance market alone is a $20bn market, with 45% of all US long distance calls made within its 13 states and Washington, DC.

$5bn investment planned

The new combined company has 39 million phone lines and 4.88m wireless customers, the second largest subscriber base in the US after AT&T. Its annual profit is $3.4bn and sales are $30bn and some 141,000 employees work at the combined company. The company also said it expects to invest about $5bn in 1997 to maintain quality and add to its US wireline infrastructure. The merger is the second to combine two Regional Bell Operating Companies behind SBC Communications Inc’s $16bn acquisition of Pacific Telesis Group in April. As part of the merger, Smith will retire and be replaced by former Nynex chairman Ivan Seidenberg in August 1998. In addition to becoming chief executive, Seidenberg will also become chairman when Smith retires at the end of 1998. Under the merger agreement, Nynex shareholders receive 0.768 of a share of Bell Atlantic common stock in exchange for each share of Nynex common stock owned and, pending board approval, the Bell Atlantic quarterly dividend rate is expected to increase from $0.74 to $0.77 per share with the next quarterly dividend in November. As a result, former Nynex shareowners’ dividend payments will be equivalent to what they would have received from the historic Nynex quarterly dividend of $0.59 per share.

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