SAN FRANCISCO-AirTouch Communications Inc. and MediaOne Group, formerly U S West Media Group, completed merging MediaOne’s U.S. cellular and personal communications services interests into AirTouch, said the carrier. The merger, valued at $5.9 billion, became effective last week.
AirTouch acquired MediaOne’s stake in PCS provider PrimeCo Personal Communications L.P.-increasing its ownership in PrimeCo from 25 percent to 50 percent-as well as its cellular unit, U S West NewVector Group.
While the deal is valued at less than $6 billion, strong performance of AirTouch common stock has increased the value of the transaction by about $200 million since the merger was announced Jan. 29, AirTouch said.
“We’ve been working toward this strategically important acquisition since 1994, and we’re delighted to reach a successful conclusion,” said Sam Ginn, AirTouch chairman and chief executive officer.
The acquisition increases AirTouch’s U.S. cellular and PCS proportionate customer base by 56 percent, to 6.9 million, making the company the second-largest wireless provider in the country, based on fourth-quarter 1997 proportionate customers, said AirTouch.
MediaOne received about $1.6 billion in AirTouch dividend-bearing preferred stock with a 5.2-percent coupon and 59.5 million shares of AirTouch common stock valued at about $2.9 billion, based on the April 3 closing price of $49 per share. MediaOne transferred approximately $1.4 billion of debt to AirTouch.
“We now can focus our resources more closely on our core businesses-domestic and international broadband, and international wireless,” said Chuck Lillis, president and CEO of MediaOne Group. “The deal also strengthens our balance sheet as we prepare to become a stand-alone company.”
AirTouch now has cellular operations in 19 states, including 15 of the top 30 U.S. markets. The company’s cellular and PCS footprint now covers cities in 25 states, reaching 145 million people.
AirTouch said that because of the deal, its earnings per share will be diluted at a peak of about 40 cents per share in 1999. The dilution is primarily due to the amortization of acquisition intangibles, said AirTouch. The company said it plans to pursue cost savings to partially mitigate the dilution. AirTouch does not expect a change in its investment grade credit ratings as a result of the transaction.
