Agreement for a merger between Bell Atlantic Corp and Nynex Corp had been looking like a done deal for some time, and over the weekend the two neighboring Bells signed off on the pact. Now comes the hard part: persuading the regulators to allow the $52,000m marriage to be consummated. The ink was barely dry on the announcement before AT&T Corp, going in the other direction and tearing itself apart, jumped up to cry foul. AT&T said the proposed deal would deny customers benefits of head-to-head competition – it’s hard to see how new competition promised by the Telecommunications Act can be attained if existing monopolies simply combine into larger ones, it said. Similar objections can be expected from cable television operators and consumer advocates. Under the agreed deal, a new entity will be formed to exchange its own shares for shares in the two companies. Bell Atlantic shareholders will get 1.302 shares in the new company for each Bell Atlantic share they currently hold, and Nynex holders will exchange their shares on a one-for-one basis. The new company will also be called Bell Atlantic but will be headquartered in New York City. Raymond Smith, chief executive of Bell Atlantic will be chairman and chief executive, but only for a year after consummation, whereupon he will retire and hand over to Ivan Seidenberg, chief executive of Nynex. The two look for cost savings of $600m a year by the third year, but a relatively modest 3,000 jobs are to be cut from the combined 133,000 workforce – AT&T by contrast is shedding 40,000. The new Bell Atlantic will have annual turnover of some $27,800m. The Bell’s home territory will stretch from Maine to Virginia, but more importantly covers most of the BosWash corridor (Southern New England Telecommunications Corp has some of the eastern end of BosWash, the megalopolis that stretches from Boston through Connecticut and New York to Philadelphia and Baltimore and on down to Washington), so that when it enters the long-distance business, much of the available traffic will be completable simply by reprogramming the two companies’ telephone exchanges. The two themselves believe completion may be 12 months away, observers expect it to take even longer.
