Bell Atlantic and Nynex Accept $27 Billion Merger; New Telco Rivals AT&TBy Mike Mills
The Washington Post
Bell Atlantic Corp. and Nynex Corp. approved plans over the weekend to merge into a single company, creating a new telecommunications giant with $27 billion in revenue and an ambitious goal: to take on AT&T Corp. and others in the global race to provide telephone, Internet, and entertainment services.
The new company, which would carry the Bell Atlantic name, would become the nation's second-largest telephone company behind AT&T. It would control nearly all local residential telephone traffic going into and out of the mid-Atlantic and New England, as well as most business traffic and much of the cellular market.
And because of a new telecommunications law, the newly merged company soon would be able to add long-distance telephone service to its offerings for customers.
"This puts together two powerhouses that can now go after the full range of telecommunications and entertainment services," said Paul T. Unger, a telecommunications analyst with A.T. Kearney in Alexandria, Va.
Consumer groups said, however, that the combination would mean less competition and, thus, higher rates for consumers.
"If there were any two Bell companies that were in a position to go in and compete with one another, because they have known brands across regions, it would be Bell Atlantic and Nynex," said Bradley Stillman of the Consumer Federation of America. "Instead, we have two entrenched monopolies joining forces to create one monopoly."
The Nynex board of directors Sunday agreed to the merger at company headquarters in New York, said sources close to the talks, which have been going on behind the scenes for months. Bell Atlantic board members approved the deal Saturday, the sources said.
Bell Atlantic's territory includes the District of Columbia, Virginia, Maryland, Pennsylvania, Delaware, West Virginia and New Jersey. Nynex serves New York and New England. Together, they control 37 million phone lines into businesses and households; one-third of the nation's long-distance traffic originates in their service areas.
Jeff Miller, spokesman for the Communications Workers of America, said he hoped job losses would be minimal. "We would expect there would be no need for any jobs lost from any merger," he said. "Both companies have been in trouble from regulators for not meeting service standards because of job cuts."