PrimeCo Personal Communications L.P., which stunned the wireless world with the largest simultaneous launch of a personal communications services network in November 1996, is on the verge of being broken up by its parent companies, AirTouch Communications Inc. and Bell Atlantic Corp.
PrimeCo ranks as one of the largest PCS players in the United States with nearly 1 million subscribers to its Code Division Multiple Access service at the end of last year. The company is known for its aggressive marketing push featuring a pink alien named Primetheus.
PrimeCo’s markets are located in Texas, Florida, Alabama, Illinois, Louisiana, Virginia and Wisconsin.
Bell Atlantic, in a joint proxy statement with GTE Corp. filed last week at the Securities and Exchange Commission, said it plans to dissolve the partnership and divide the properties with AirTouch as soon as the merger of AirTouch and U.K.-based Vodafone Group plc closes, expected sometime this summer.
Bell Atlantic and GTE also are awaiting the consummation of their own merger, which is slated to close later this year. The companies reportedly have asked the Federal Communications Commission to delay consideration of their merger agreement until the companies figure out how to deal with certain long-distance rules.
Brian Wood, director of corporate communications for Bell Atlantic Wireless Group, said the original PrimeCo partnership agreement included a clause that allowed either of the partners to break up the partnership in 2001 or in the event any of the partners underwent a significant change of control. Wood noted Bell Atlantic probably would have called for a break-up of the partnership in 2001 even if AirTouch had not been acquired by another company.
With its pending acquisition of GTE, Bell Atlantic is forced to deal with significant overlaps in some of its markets. GTE’s wireless properties overlap with PrimeCo in Houston and Tampa, Fla.
The overlap problems were compounded earlier this month when GTE acquired Ameritech’s Midwestern wireless assets, including Chicago and St. Louis. PrimeCo holds a 30 megahertz PCS license for Chicago, putting a combined Bell Atlantic/GTE over spectrum cap rules in that market as well.
Some analysts suspected the overlap situation eventually would be addressed by a break up of PrimeCo, with at least the Chicago, Houston and Tampa markets going to AirTouch.
In addition, Wood said Bell Atlantic no longer feels it needs the PrimeCo properties to help it achieve a national footprint.
Wood said the companies have not yet formalized a plan for how the alliance will be dismantled and whether the PrimeCo brand will remain, but he said it will be done in a manner that will not hinder to the combined Bell Atlantic/GTE.
Bell Atlantic and AirTouch also are trying to resolve a dispute concerning their 1994 TomCom agreement, which was formed to create a nationally competitive brand and a seamless national wireless network. The agreement also included a non-compete clause that prevented any of the parties from competing in the same markets.
After losing out to Vodafone in a bid to acquire AirTouch earlier this year, Bell Atlantic filed a lawsuit seeking to dissolve the TomCom agreement, saying TomCom’s objectives were never carried out. In February, AirTouch filed a counterclaim seeking damages and enforcement of the non-compete clause. Wood said the companies are in the discovery phase with the next hearing scheduled for May.
In the event AirTouch wins its bid to enforce the non-compete provisions of the companies’ agreement, Bell Atlantic said it would have to dispose of some GTE cellular properties outside of PrimeCo’s territory, which could impair its ability to account for its merger with GTE as a pooling of interests.
Despite what seems to be a growing rift between AirTouch and Bell Atlantic, AirTouch officials have publicly stated their desire for the two companies to establish some kind of relationship that would give both a much-desired national reach. Analysts say an operational combination of the two is unlikely given the huge spectrum overlaps that would occur, but they say a roaming partnership would still make sense for both companies.
