|
Ameritech sets $3.3B sale
|
 |
April 5, 1999: 9:25 a.m. ET
Cellular assets on the block in bid to win OK for planned SBC merger
|
NEW YORK (CNNfn) - Ameritech said Monday it agreed to sell cellular phone assets in the Midwest for $3.3 billion, clearing one hurdle to completing its proposed merger with SBC Communications.
But while the sale will help the companies meet Justice Department requirements for merger approval set last month, the proposed merger with SBC still needs the blessing of the Federal Communications Commission, whose chairman, William Kennard, last week voiced doubts about the deal, worth $62 billion when it was announced last May.
Ameritech said it would sell 20 Midwestern cellular properties in Chicago, St. Louis and other cities in Illinois, Indiana and Missouri to GTE and Georgetown Partners, an investment firm based in Washington, for $3.27 billion cash.
The move had been widely expected after Justice Department regulators last month gave their tentative OK to the SBC deal but said the companies would have to sell cellular licenses in the Midwest to meet federal rules barring companies from owning two licenses in the same market.
"As promised, this sale demonstrates that the SBC-Ameritech merger will bring substantial new competition into the Midwest," Ameritech Chairman Richard Notebaert said. About 1,700 Ameritech cellular employees will transfer to GTE as a result of the sale, which will be "transparent" to customers, the company said.
SBC and Ameritech are eager to show that competition won't be harmed by their merger, which would bring under one roof three of the seven "Baby Bells" that were once part of phone monopoly AT&T 14 years ago.
The planned merger has drawn criticism from competitors such as AT&T and some consumer groups who say the deal will reduce competition and raise rates.
FCC Chairman Kennard said Thursday he shares some of those concerns. In a letter to the chief executives of both companies, Kennard said the deal raises questions about whether it would benefit consumers as required under the nation's telecommunications laws.
"At this stage, I have serious concerns about whether your proposal satisfies this requirement," Kennard said in the letter.
Kennard asked that the companies meet with commission representatives soon to work on setting conditions the FCC would find satisfactory for approval of the deal.
Ameritech stock rose 2-5/8 to 60-1/4, SBC jumped 2-9/16 to 49-3/4 and GTE added ¼ to 60-3/4 Thursday. The stock market was closed Friday ahead of Easter. 
|
|
|
|
|
 |
|
