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Baby Bell buying AirTouch?
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January 1, 1999: 12:04 p.m. ET
Bell Atlantic in talks with AirTouch, would create 2nd largest wireless company
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NEW YEAR (CNNfn) - Shares in telecom companies are likely to catch the eyes of investors Monday as the market digests word of yet another possible merger in the industry.
According to several reports, Bell Atlantic Corp. is in talks to acquire AirTouch Communications Inc. in a deal valued at up to $45 billion. The merger would transform the regional Baby Bell into the second-largest wireless company, behind AT&T Corp. (T), said Jeffrey Kagan, an independent telecommunications industry analyst.
The merger also would put pressure on AT&T Corp., Sprint PCS and MCI WorldCom, which does not yet have wireless properties.
New York-based Bell Atlantic declined comment on any possible talks. AirTouch could not be reached for comment.
Analysts welcomed the merger talk.
"Bell Atlantic gains, first, and foremost, a national footprint for wireless, and this will enable it to match up against AT&T and Sprint PCS, which are the two other national wireless players," said telecommunications analyst Eric Strumingher of PaineWebber. "That would make really three companies that could offer their subscribers the ability to use the wireless network anywhere in the country."
Strumingher added the reported merger talks came as no surprise.
"These companies have had a very close relationship for several years now, because they are partners in two large wireless partnerships, one covering traditional cellular, the other covering their PCS businesses - the new digital cellular that operates at a higher frequency, and since those relationships were inked several years ago, there has been speculation that at some point the two companies would merge," he said.
The New York Times reports that the deal could be announced as early as Monday.
The Times reports that both boards are expected to meet over the weekend to hammer out the details.
If the deal is approved, the purchase price reportedly would be about a 10 percent premium over AirTouch's Thursday closing price.
AirTouch shares finished up 3-1/16 Thursday at 72-7/16 on the Big Board.
(Click here for a chart of AirTouch's stock activity)
AirTouch's presence in overseas markets, including Germany, also would give Bell Atlantic a valuable inroad into expanding its networks abroad.
Bell Atlantic has 5.7 million cellular customers throughout the East Coast.
AirTouch has 7.8 million customers in the United States and more than 11 million worldwide. The company operates mostly on the West Coast, but has some partnerships in Europe and Asia.
Bell Atlantic and AirTouch already own a wireless partnership called PrimeCo. In July, Bell Atlantic said it may have to restructure the partnership because of its proposed GTE merger.
The merger talks may have been motivated by Bell Atlantic's desire to compete nationwide against AT&T's Digital One Rate plan, which allows users to call all over the country on a wireless phone for a flat fee, analysts said.
Shares of Bell Atlantic (BEL) ended down 3-1/2 Thursday at 54 on the New York Stock Exchange.
(Click here for a chart of the company's stock activity) 
--from staff and wire reports
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Bell Atlantic
AirTouch
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