Partnerships-even those between Bell companies and long-distance carriers-should be expected in today’s cut-throat telecommunications industry, said a spokesman for Sprint Corp. in response to reports the company may ally with two Bell companies.
Sprint, the third largest long-distance carrier, reportedly is discussing a possible merger with Bell Atlantic Corp. and Nynex Corp., but officials at Sprint would not confirm such discussions are taking place.
“In this industry right now, a lot of people are talking to a lot of people,”said Sprint spokesman Bill White. “Every day there is another alliance, so none of that should surprise anyone. It’s the most efficient way to handle nationwide services. No one has the resources to do some of these things alone,” he said.
It’s no secret that Sprint wants to offer a seamless nationwide wireless service, and is positioned to offer its national brand name to the deal, White added.
Bell Atlantic has been talking with Sprint and other companies as well, said Bell Atlantic spokesman Eric Rabe, but he would not say whether merger plans are actually in the works. There also has been talk that regional Bell operating company Ameritech has had discussions with the other three companies, but again there is no confirmation.
Bell Atlantic and Nynex in July agreed to merge their cellular operations into a new $13 billion company that will provide cellular service from Maine to South Carolina. That venture, barring regulatory roadblocks, could be completed by the second quarter 1995.
The pending merger of AT&T Corp. and McCaw Cellular Communications Inc. is a great concern to competitors, Rabe noted. Bell Atlantic and Nynex recently lost a bid for a preliminary injunction to stop the AT&T-McCaw merger, but were given permission to proceed with their lawsuit aimed at dismantling the purchase. AT&T and McCaw hope to complete their merger by the end of this month.
“AT&T-McCaw will become the biggest player in this industry and their financial resources will dwarf anyone else,” Rabe said. “To compete, you have to be the size of a 900-pound gorilla. It’s not a hard calculation for anyone awake to see.”
But standing in the way of such “competitive” mergers is the 1982 consent decree that broke up AT&T, which restricts the Bells from engaging in long-distance services as well as manufacturing. The U.S. House of Representatives in June approved legislation that would allow the regional Bells to offer long-distance services. The Senate, however, has not yet acted on the bill, and the congressional session is coming to a close.
An alliance between Sprint, Bell Atlantic and Nynex would make it the largest cellular operator in the country, even larger than AT&T-McCaw. Together, the trio would have more than 3 million subscribers and almost 76 million potential customers, or pops.
The alliance also would give the companies more clout when bidding for personal communications licenses in upcoming auctions.
Sprint sold its cellular properties in 1988 to Centel Corp., then repurchased them in 1992.