Pacific Telesis Group Inc finally go the nod from the California Public Utilities Commission to spin off its cellular operations, and the board wasted no time in giving the flotation of 12% of the equity prior to distrbuting the other 88% pro rata to its existing shareholders. Pacific Telesis announced late last year it planned to keep its Pacific Bell and Nevada Bell units in one company while selling off its PacTel Cellular, PacTel Paging and PacTel International operations as a separate company. Among conditions imposed by the Commission, Pacific Bell will have to file a financial plan showing how it will assure future financial stability of its basic telephone operations after separation, covering the period 1994 to 2000, within 60 days. It also said the initial public offering for the wireless operations must be constructed so that no individual or corporation can hold more than 2.24% of the stock. The Commission also ordered Pacific Telesis to refund $41.3m to its Pacific Bell telephone operating company, covering research and development expenditures paid for with utility rates between 1974 and 1983 at the units to be spun off – that refund could have been a sticking point because some feared that a refund of up to $1,000m might have been ordered. The Commission said that after the spin-off, the new wireless communications company to be formed, and Pacific Telesis will be free to explore new markets and face new competitors, including former affiliates, noting that it will need to complete the separation quickly to allow its wireline business to compete for frequencies in the new Personal Communications Services.
