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Telco deals on track, firms say
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March 23, 1999: 1:53 p.m. ET
Agency weighing merger conditions but companies say they're going ahead
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NEW YORK (CNNfn) - Big telephone companies expressed confidence Tuesday that their mergers will be approved after regulators were said to be eyeing attaching tough conditions that might derail the deals.
"We're very confident that our transaction is on track in terms of approvals," GTE Corp. spokesman Peter Thonis told CNNfn.
Bell Atlantic, which has agreed to buy GTE for $52 billion, and SBC Communications Inc., whose $56 billion acquisition of Ameritech Corp. is pending, may be forced to open their networks to rivals in order to win approval of the mergers, a published report said Tuesday.
"We are very confident that we'll get the merger closed by mid-year," SBC spokesman Selim Bingol said. "The story basically reaffirms what the FCC has said all along -- that it may or may not impose conditions," he said, referring to a Wall Street Journal report that regulators may impose a network-opening requirement or other conditions on the deals.
Any such move could delay or even end the planned mergers, the newspaper said, noting the Federal Communications Commission has not made a decision and may approve the deals without conditions.
The agency has permitted several big mergers in recent years, including AT&T's recently completed $55 billion purchase of cable giant Tele-Communications and Bell Atlantic's $23 billion merger with Nynex, completed in 1997. Those deals have led to some problems in enforcing conditions designed to ensure free competition, the newspaper said.
The companies say the mergers will boost competition and bring lower prices for consumers. Their stocks came under pressure Tuesday in a broadly lower market. SBC fell 1 to 49-7/16, Ameritech lost 2-3/16 to 61-15/16, Bell Atlantic dropped 1-1/4 to 51-3/4 and GTE declined 1-1/2 to 58-3/8.
Ameritech (AIT) and SBC (SBC) officials said the "checklist" rules that require regional Bell companies to open their networks before they can offer long-distance service in their home markets have nothing to do with merger approval.
"Every section of the Telecom Act has its own purpose and we take them all seriously," Ameritech said. "But the 271 checklist rules are for getting long-distance approval, not for merger approval. Congress could have put in 271 preconditions for mergers, but they did not… That issue is a red herring."
The company said it was "confident" regulators would apply the guidelines "Congress actually imposed and reach their decision accordingly."
Bell Atlantic (BEL) spokeswoman Susan Butta said Bell Atlantic and GTE already have proposed a plan for the FCC to approve their merger -- the companies would move 100,000 GTE long-distance customers to other long-distance carriers and GTE would be allowed to keep selling Internet "backbone" capacity as long as Bell Atlantic met the rules to offer at least a quarter of its customers long-distance service.
"The interim relief is needed to keep them (GTE) competitive in a market that's in need of strong competitors," Butta said, noting GTE was the smallest of the four major suppliers of Internet access lines to online service providers and other firms. The merger was on track for approval by year-end, she said. 
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