WASHINGTON-Tele-Communications Inc. President Leo Hindery, grilled by federal regulators last week on the cable TV giant’s planned $48 billion merger into top long-distance and mobile phone carrier AT&T Corp., said TCI’s 30-percent stake in Sprint PCS likely will be divested or put in a voting trust.
“We fully anticipate that our ownership in Sprint must be treated in a way that distinguishes it going forward from what Mr. Armstrong is contemplating in AT&T Consumer Services. Whether that be through a voting trust or a disposition, either of those outcomes have been anticipated by us and both will be respectful to either if that is the choice of yourself and the Department of Justice,” said Hindery in response to a question from Federal Communications Commission member Michael Powell.
Hindery’s remarks at the first of several merger hearings at the FCC last Thursday comes just weeks before a Nov. 13 print shareholder meeting, at which time approval of the company’s personal communications services business will be sought.
Hindery’s response to Powell’s question on the wireless issue is believed to be the first public acknowledgement of how TCI’s $1.5 billion stake in Sprint PCS could be handled in a way that is satisfactory to the Justice Department and other parties.
RCR previously reported TCI and two other major cable TV stake holders in Sprint PCS-Comcast Corp. (15 percent) and Cox Communications (15 percent)-were anxious to pull out of the digital mobile phone venture because of steep losses incurred by Sprint PCS and their desire to address increased competition to their core cable TV business.
The main challenge appears to be how the cable TV firms can back out of Sprint PCS without hurting anyone.
“The only caution I would raise,” Hindery said, “is that whatever the resolution of the commission and the department is-whether it’s a voting trust or a disposition-it should be over a respectable period of time [in order] to not disrupt the capital plans and opportunities of Mr. [William] Esrey, who’s got a business to build. But we have no interest or intention of seeing that asset go forward in a way that conflicts with AT&T Consumer Services.”
Esrey is the chairman of Sprint.
AT&T Chairman Michael Armstrong, one of several executives who spoke at the FCC hearing, told federal telecom regulators an AT&T-TCI merger would give American consumers real local competition for the first time.
“We have talked with Justice and discussed different methods of how to dispose the shares. Everyone’s aim is the orderly disposition of the shares,” said Bill White, a spokesman for Westwood, Kan.-based Sprint.
Specifically, White said the idea of setting a trust and selling off TCI’s 30-percent interest in Sprint PCS over time has been offered. White also noted that, despite the its 30-percent stake in Sprint PCS, TCI has one-tenth voting right per share.
Asked about Justice’s review of the proposed AT&T-TCI merger, TCI lobbyist David Krone said, “I think they’re progressing … I don’t think there are problems.”
In addition to that deal, the FCC, Justice Department and state regulators are reviewing proposed mergers between SBC Communications Inc. and Ameritech Corp. and between Bell Atlantic Corp. and GTE Corp.
FCC Chairman Bill Kennard and Commissioners Susan Ness and Gloria Tristani, all three Democrats, said the planned mergers could have huge implications for the telecom industry and consumers.
Republican members Harold Furchtgott-Roth and Michael Powell, for their part, cautioned the agency against overstepping its legal authority in considering the deals.
