The upshot of Pacific Telesis Group Inc’s protracted examination of its options to maximise shareholder value is that the company will spin its lightly-regulated PacTel Corp wireless communications business off to its shareholders, and revert to being a regulated local phone company serving California and Nevada. It will be left with about $9,000m in annual turnover, while the liberated PacTel, which includes cellular operations, paging, vehicle location and international businesses, had turnover of $829m for the 12 months to September 30. Pacific Telesis aims to raise $750m in new equity for PacTel either through a public equity offering or from private investors, or a combination of both, before spinning off its remaining interest in the company in a tax-free distribution to shareholders. The move is seen as one of frustration at the iron hand with which the Californian regulators pursue their task: the company says that the spin-off is intended to free PacTel from the complex regulations that apply to it as part of Pacific Telesis, the West Coast company created by the break-up of AT&T Co in 1984. Pacific Telesis will continue to own Pacific Bell and Pacific Bell Directory, Nevada Bell, and several smaller units. The plan is expected to take about a year to implement. Justifying the move, Pacific Telesis says it will bring opportunities for both new companies and pave the way for the wireless company to expand dramatically overseas. PacTel is operator of the fifth-largest US cellular telephone company, and has holdings in cellular franchises in Germany, Japan and Portugal, and interests in other wireless operations in Spain, France, Thailand and South Korea.
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