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Merged Bell dials up plan
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August 15, 1997: 12:54 p.m. ET
Bell Atlantic will invest $5B and expand into long distance market
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NEW YORK (CNNfn) - With federal regulatory approval of Bell Atlantic's $26 billion merger with Nynex in hand, the company's top two executives said Friday that their top priority now is breaking into the lucrative long-distance market.
Bell Atlantic is also investing $5 billion to upgrade the merged company's network of telephone lines, in part to address concerns about Nynex's service record, they told CNNfn.
"It's been an absolutely terrific integration process," said Ray Smith, chief executive of Bell Atlantic.
Smith appeared on CNNfn's "In the Game," with Ivan Seidenberg, the former Nynex chairman who is now Bell Atlantic's president. Seidenberg will take the helm when Smith retires at the end of 1998.
The company hopes in the next five years to seize at least 25 percent of the long-distance market in its region, which includes 13 Northeast states and Washington, D.C. Smith said the expansion will be a huge moneymaker, considering the market is worth $20 billion in the east. (264K WAV) or (264K AIFF)
"We've got some things to do in the future, but primarily it's to build a long-distance business, which is gigantic and right there for the picking," Smith said. "It's low-hanging fruit and we're ready to go."
The Federal Communications Commission on Thursday approved the merger of the two Baby Bells, forming the nation's largest local carrier and the second-biggest communications communications company after industry titan AT&T.
The FCC attached several conditions to make sure the new company opens up the local phone market to competitors. The two carriers agreed to many of the terms last month, paving the way for FCC approval this week.
Seidenberg said the $5 billion investment would help the new company move ahead in the fast-moving industry.
"The key thing that's going on in our market is great growth," Seidenberg said. "We've started to accelerate our investments to get ahead of the curve."
Seidenberg acknowledged the cash infusion to improve phone lines would address customer complaints with Nynex's service. But he said service would always be a priority. (158K WAV) or (158K AIFF)
"From our perspective, our (service) job is never done," Seidenberg said. "Service is our most important issue. It's the bedrock of our company."
The deal was first announced in April 1996. The new Bell Atlantic will have combined assets of $50 billion and serve an area stretching from Maine to Virginia with 39 million phone lines. The company will rank 23rd on Fortune magazine's list of the 500 largest U.S. corporations.
While some market watchers questioned whether the two giants could expect a smooth merger, given the resignations of top executives and other issues, Smith remained upbeat. He said the companies already know how to work together since they merged their cellular businesses three years ago.
"We think (the merger) is going swimingly," Smith said.
Bell Atlantic stock (BEL) was down 11/16 to 75-1/4 in midday trading Friday on the New York Stock Exchange.
-- Martine Costello
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Bell Atlantic
Nynex
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