Ivan Seidenberg is making his mark.
On his first official day as chairman of Bell Atlantic yesterday, Seidenberg confirmed he is negotiating yet another mega-merger – this time, the acquisition of wireless giant AirTouch Communications for $43 billion.
Those talks have bogged down over concern that the companies might not be able to do the deal in a way that would spare Bell Atlantic steep charges against earnings.
To resolve the matter, execs have asked the SEC to sign off on the deal as a pooling of interest, an arrangement that would not require charges for goodwill.
If the deal comes off, it would be Seidenberg’s third bold strike since the passage of the Telecom Act in 1996.
The Bell Atlantic chief, who began his career installing phone lines, engineered the sale of Nynex to Bell Atlantic, and a merger with GTE.
He has been calling the shots for months, since Ray Smith announced he’d step down. Described by colleagues as low-profile and quick to share credit, Seidenberg formally took over upon Smith’s retirement yesterday.
In the last few years, Seidenberg has built his New York-based Baby Bell into one of the four major contenders to control the world of telecommunications in the next century. The others are AT&T, WorldCom/MCI, and SBC.
“You’re beginning to see the influence of Seidenberg on Bell Atlantic,” said Brian Adamik, a telecom analyst at the Yankee Group.
All the major telecom operators are furiously jockeying for position to make sure they’re among those left standing in the coming telecom wars.
They’re trying to build or buy collections of businesses that will allow them to offer a complete bundle of services to their customers – local, long-distance, international, Internet, and wireless.
Adamik likens the preparations to military buildups during the Cold War.
“They’re all trying to develop the capability to take out the enemy,” he said.
A Bell Atlantic-Airtouch deal would likely get the blessing of regulators, because it would allow Bell Atlantic to better compete with long-distance providers AT&T, Nextel Communications, and Sprint PCS.
Such additional competition could be good news for consumers, if it lowers their wireless phone bills as expected.
So far, investors are ambivalent.
Bell Atlantic shares have fallen 59/16 to 5115/16 since word of the talks surfaced Thursday, losing 21/16 of that total yesterday. AirTouch originally gained 31/16 to a record 727/16 on word of the talks, but gave up 43/16 to close at 681/4 yesterday, on fears that Bell Atlantic wouldn’t pay a full price.
AirTouch, the biggest wireless carrier, had 16.1 million customers around the world as of the end of September, with U.S. operations clustered in the West. Bell Atlantic would add those to its own 7.9 million wireless customers.
Seidenberg was chairman of Nynex when Nynex was acquired by Bell Atlantic. That deal gave the merged company a giant East Coast footprint, with access to powerful corporate clients in New York, Boston, Washington, D.C.
Seidenberg and Smith announced they would acquire GTE in a deal valued at $78.7 billion, providing local, long-distance and wireless customers around the country.
Acquiring AirTouch would allow Bell Atlantic to better compete with AT&T, which has lured away wireless users with its offer of flat fees for wireless users anywhere in the U.S. Currently Bell Atlantic charges more for the use of its wireless services outside the Bell Atlantic region.
From here, Bell Atlantic is likely to focus on building its capability in data transmission, to compete more effectively with WorldCom/MCI. GTE’s BBN unit will give the company a good foundation to build on.
Bell Atlantic will also have to continue building its global presence, to convince U.S. multi-nationals to sign on. The company might link up with some global telecom companies in the process.