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Verizon talks continue
August 3, 2000: 7:35 p.m. ET

No. 1 U.S. wireless concern still in negotiations to sell Midwest assets
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NEW YORK (CNNfn) - Verizon Communications is still working on a deal to sell a portion of its Midwest wireless assets to a consortium of investors for nearly $1.4 billion, sources close to the negotiations told Thursday.

The negotiations involve Verizon selling a portion of its Chicago and Cincinnati wireless licenses to a consortium called BGV. The negotiations are at an advanced stage but a final deal has not been signed, a source said.

Verizon (VZ: Research, Estimates), currently ranked as the No. 1 U.S. wireless concern with more than 25 million customers nationwide, had planned on announcing the transaction on Wednesday, but last-minute hitches put the deal on hold, according to a source.

"We are waiting to see when we can [announce the deal]," a source said.

The Pennsylvania-based consortium includes management of Triton Cellular Partners LP and other investors, including Arlington Capital, Greenleaf Ridge, and affiliates of J.P. Morgan & Co. (JPM: Research, Estimates) and First Union Corp. (FTU: Research, Estimates).

graphicVerizon Wireless, created through the merger of wireless properties from Bell Atlantic Corp., GTE Corp. and Vodafone Air Touch PLC, has duplicate assets in several markets, including Richmond, Va., Tampa, Fla., Houston, San Diego, San Francisco, Chicago and Cincinnati.

Federal law prohibits one company from owning more than one wireless license in any particular market. Verizon has already shed extra licenses in each of the other markets it is required to, but still must sell additional ones it holds in Chicago and Cincinnati.

The Wall Street Journal's online edition first reported Wednesday that Verizon was selling licenses in those two markets, covering roughly 16 million potential customers and 400,000 current customers.

However, analysts have questioned whether the price tag is accurate and some believe that Verizon's final deal will come in at more than $1.4 billion or will cover fewer potential customers.

Analyst Pat Commack, of Guzman & Co., said the $1.4 billion price tag is too low and Verizon should sell the licenses for at least $3.2 billion--which would equate to about $200 to $250 per potential customer.

Deutsche Telekom (DT: Research, Estimates) paid about $240 per potential customer when it agreed to buy U.S. wireless concern VoiceStream Wireless Corp. (VSTR: Research, Estimates) earlier this month, which is a fair price, Commack said.

"If Verizon has to do a deal because it has to abide by FCC rules, then let's do it for $200 [a potential customer] at least," he said.

Verizon fell 5/16 to close at 47-9/16 on Thursday. Back to top


Verizon near deal to sell certain wireless assets - Aug. 2, 2000