- The Washington Times - Monday, April 10, 2000

Bell Atlantic Mobile and Vodafone AirTouch PLC had the limelight April 4 after completing their merger. The deal will create the largest U.S. wireless carrier.

One day later SBC Communications Inc. and BellSouth Corp. announced their own merger, a deal creating the nation's second-largest wireless carrier with an estimated 16 million subscribers. AT&T; Corp. will be the nation's third-largest wireless company with 12.2 million wireless subscribers.

Patrick J. Devlin, president of the Mid-Atlantic region for the new company formed by the merger of Bell Atlantic and Vodafone, said mergers are continuing in the wireless industry because of the huge investment needed to operate a nationwide wireless carrier.

The merged companies announced plans to invest more than $3 billion this year in upgrading and expanding their national wireless network to increase capacity and add new services.

Bell Atlantic also plans to complete a $90 billion purchase of GTE Corp. this quarter. That combination of three companies will have about 24 million wireless subscribers, with a likely 28 million subscribers by the end of this year.

Bell Atlantic and Vodafone agreed to combine their U.S. wireless properties last September.

After completion of the Bell Atlantic-GTE merger, Bell Atlantic will own 55 percent of the new company introduced April 4 as Verizon Wireless and Vodafone will own 45 percent of the New York City-based company.

The new company already has plans to go public.

The name pronounced ver-EYE-zon was selected from more than 8,500 choices and combines the Latin word "veritas," meaning certainty and reliability, and "horizon," signifying possibilities ahead.

Q: Are you one of those guys who talks on a wireless phone while driving?

Mr. Devlin: "Yes. On my hands-free kit with both hands on the wheel."

Q: Bell Atlantic and Vodafone completed the merger Monday. On Tuesday, SBC and BellSouth announced their merger and by the end of the year they will be the second-largest wireless company behind your company. What is going on? Why is this happening now?

A: "It's happening now because to really succeed in this business you need to be very large. It's a very capital-intensive business. We announced we are spending $3.3 billion on networks. You can only do that if you have a large scale and scope … Customers demand high-quality service. They want it to be almost home-like and office-like. There's only one way to do that, and that's to be big."

Q: What's the wave of mergers mean for the small, regional wireless carriers?

A: "There really aren't that many left … I think you'll see more and more of the regional carriers partnering up with the larger ones to reduce their roaming rates or come together and merge with the larger ones. The industry is going through tremendous consolidation, and that's due to the capital-intensive nature of the business. I believe you'll still have regional players out there because there are niche markets out there that maybe aren't cost-effective for the large players to play in."

Q: How do mergers and the formation of new and ever-bigger companies intensify the competition for wireless subscribers? Are you guys trying to steal each other's customers or trying to win the business of new wireless customers? Where's the bigger prize?

A: "Both. We are vigorously competing for the business of customers, whether they come from an existing carrier or they're new. The larger prize is the people who don't have a handset yet. There are many estimates as to the penetration … but some go as high as 70 percent of population in the U.S. will have a wireless device of some sort by the year 2009, and obviously the country is nowhere near that now."

Q: When you talk about services for customers improving, national coverage is important because it eliminates roaming charges and spotty coverage that leads to static-filled calls or calls going dead. Will mergers result in positive developments for consumers by improving the quality of calls?

A: "Yes. There will be tremendous improvements made over the coming years in the quality of service in two ways. Number one, with the investments we are making we will fill in the holes across the country and, two, by adding additional capacity with the CDMA (code division multiple access one way to deliver wireless calls) technology, which we believe is the premier technology. Those two things, investments in towers and through utilization of CDMA technology, will really enhance the quality of the service."

Q: You mentioned the $3.3 billion investment. Should people be concerned that an investment of $3.3 billion means some costs to consumers will increase?

A: "Past experience can be no determiner of the future … but prices have come down … Do I expect prices to sky rocket? I don't think so."

Q: The cost of cellular calls per minute has continued to fall. Will mergers have the effect of cutting costs even more?

A: "We just rolled out some very aggressive pricing plans, and we have many plans on the drawing board in every arena our customers play in, so stay tuned for more product roll-outs … We intend to be the acknowledged market leader, and to do that we're going to have to provide a lot of value to our customers. We intend to be aggressive."

Q: With the merger, who are you targeting? AT&T;? SBC?

A: "We're not really targeting any company … The people that are in our field are some of those names you mentioned, but we aren't really targeting one competitor. We have our own philosophies and our own strategies."

Q: You sound like a candidate who's way in front and won't mention the other guy in the race.

A: "Who are the other guys?"

Q: Who came up with Verizon, and have they been fired yet?

A: "We love the name Verizon. We feel strongly that it's a name that speaks to our heritage, where we came from, and also where we're going. I don't believe the people have been fired. I believe they've probably been promoted because it's been a very successful roll-out. In some of the testing we've done, the name is very recognizable."

Q: Aren't Vodafone and Bell Atlantic recognizable?

A: "They are, but this is a new era. This is a new company. This is a company that will be able to provide things that the old companies were not able to provide because of the scale and scope, because of the footprint, because of the investment. It's a new day for us, and we felt strongly that a new name was very important."

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