BellSouth, SBC Create Nation's 2nd Largest Wireless Company with $10.2 Billion in Revenues.Business Editors & High-Tech Writers ATLANTA and SAN ANTONIO--(BUSINESS WIRE)--April 5, 2000 New National Wireless Company to Serve 40 of Top 50 U.S. Markets, Accelerate Wireless Data Offerings BellSouth Corporation (NYSE NYSE See: New York Stock Exchange :BLS See Bureau of Labor Statistics. ) and SBC (1) (SBC Communications Inc., San Antonio, TX, www.sbc.com) A large, national telecommunications company that grew from a multitude of local and regional companies, including Southwestern Bell, Pacific Bell and Nevada Bell, into a single, unified brand by 2002. Communications Inc. (NYSE:SBC) today announced they will combine their U.S. wireless operations, creating a powerful new wireless company to compete nationwide in the exploding wireless voice and data businesses. The new company will be the second largest wireless carrier in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , serving 16.2 million subscribers and reaching 175 million potential customers from coast to coast with the most robust set of services in the wireless industry. Both companies will share joint and equal control of the combined entity. The joint venture will allow SBC and BellSouth to achieve the scale and scope to compete aggressively nationwide, offering customers everything from wireless Internet access See how to access the Internet. and interactive messaging, to attractive national rate plans and bundles of other services. In addition, the joint venture will pursue opportunities to grow the business through further expansion of its national wireless network. The new wireless company will have several significant competitive advantages: -- Immediate reach into 19 of the nation's top 20 markets and 40 of the top 50, reaching 70% of the U.S. population. The new company's interactive wireless reach will be nearly universal across the United States. -- Innovative data offerings, including BellSouth's leading wireless data applications such as the RIM 950 interactive pagers and Palm VII The Palm VII product family consisted of two products, the Palm VII and the Palm VIIx Palm Pilots. These were produced by Palm, Inc., before it was split into PalmOne and PalmSource. They had antennas for wireless data communication on the Mobitex network under the now defunct Palm. (TM) PDAs. America Online See AOL. plans to deliver wireless AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. applications via the BellSouth Intelligent Wireless Network(SM). -- Distribution channels with more than 15,000 points of customer contact, backed by the two companies' marketing prowess. The joint venture will also take advantage of new distribution opportunities with national partners. -- Compatible technologies (both companies use TDMA (Time Division Multiple Access) A satellite and cellular phone technology that interleaves multiple digital signals onto a single high-speed channel. For cellular, TDMA triples the capacity of the original analog method (FDMA). and GSM digital technologies) providing consistent, reliable service across the United States, which will soon allow customers to use their phones nearly anywhere in the world. -- Leadership in wireless market share, built on a record of superior customer service and network reliability by both companies. -- Financially strong wireless operations, with double-digit revenue and subscriber growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. , and industry leading margins. "We are combining two of the best wireless operations in the country into a stronger, bigger, more capable national competitor," said Edward E. Whitacre Jr., SBC Communications Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Our customers will soon have a more powerful wireless provider, capable of quickly rolling out state-of-the-art data services, and we will create value for our investors." "This is an exciting day for BellSouth and SBC. Together, we have formed the nation's premiere provider of wireless voice and data services, on a shared platform for substantial future growth," said Duane Ackerman, BellSouth Chairman and CEO. "With this new company, BellSouth's and SBC's investors will achieve appropriate value recognition of our wireless assets, unlocking significant shareholder value." Analysts predict wireless penetration in the U.S. will reach 70 to 80% within 10 years, up from 30% today, driven by demand for wireless data and Internet services, increasingly competitive pricing and broader national coverage. SBC and BellSouth have executed agreements to ensure their continued ability to offer customers bundles of services that include wireless. There will also be agreements through which the joint venture can sell telephone services of the parent companies, including, for example, DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary , Internet access or features like Caller ID A telephone company service that sends the caller's telephone number between the first and second ring of the call. If the calling number is not blocked, the calling number is displayed on the handset or base station of the called party. . According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. both chairmen, growth for the new venture will be fueled by competing successfully for more high-end customers who are interested in wireless data and Internet services and from broader national coverage. The joint venture will be capable of making acquisitions, and bidding on new or re-auctioned wireless frequencies, using its own capital structure, potentially allowing it to issue debt and stock to the public to generate additional cash to fuel its national expansion and product development efforts. "It's a smart, strategic solution for SBC and BellSouth," said Whitacre. The joint venture will be a separate company with control shared by both SBC and BellSouth. Ownership in the new company will be 60% for SBC and 40% for BellSouth, based on the value of the assets both are contributing to the venture. Earnings for the new company will flow back proportionately to SBC and BellSouth. Both project that the transaction will not have a negative impact on their respective earnings. "SBC and BellSouth have known each other for years, and we've structured this company to succeed," Whitacre said. "We've made the same decisions on technology. We share the same values, and dedication to customers. Together, we will be a competitive force in the U.S. wireless market." The new wireless company will be managed independently from both parents, with a four-seat Board of Directors (two seats from each company). The name of the new company, its headquarters location and its chief executive officer will be announced soon. The companies are currently conducting an internal and external search for the new CEO. Combining SBC's and BellSouth's wireless units will not affect or impede either company's ability to compete against each other for a host of other services. "We've made a commitment to enter and compete in 30 new markets around the nation, including many of BellSouth's markets. We're going to keep that commitment," said Whitacre. "While we're now partners in wireless, we'll continue to be competitors in every other area of our business." "The new company allows BellSouth to create an even broader array of competitive wireless offerings, giving customers what they want, when they want it," said Ackerman. The transaction requires the approval of the Federal Communications Commission Federal Communications Commission (FCC), independent executive agency of the U.S. government established in 1934 to regulate interstate and foreign communications in the public interest. and the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community , and the review of the U.S. Department of Justice. Divestitures of some overlapping properties will be required. The companies expect to close the transaction by the end of the fourth quarter of this year. BellSouth was advised by Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. . SBC was advised by Lazard and Salomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. . To view additional materials relating to this announcement, visit the www.bellsouth.com/investor or www.sbc.com websites. SAFE HARBOR Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. STATEMENT: Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties. A discussion of factors that may affect future results is contained in SBC's and BellSouth's respective filings with the Securities and Exchange Commission. SBC and BellSouth disclaim any obligation to update or revise statements contained in this news release based on new information or otherwise. BellSouth is a $25 billion communications services company. It provides telecommunications, wireless communications, cable and digital TV, directory advertising and publishing, and Internet and data services to more than 37 million customers in 18 countries worldwide. SBC Communications Inc. (www.sbc.com) is a global communications leader. Through its subsidiaries' trusted brands - Southwestern Bell, Ameritech, Pacific Bell, SBC Telecom, Nevada Bell, SNET n. 1. The fat of a deer. v. t. 1. The clear of mucus; to blow. and Cellular One - and world-class network, SBC's subsidiaries provide local and long-distance phone service, wireless and data communications, paging, high-speed Internet access and messaging, cable and satellite television, security services and telecommunications equipment, as well as directory advertising and publishing. In the United States, the company currently has 90.4 million voice grade equivalent lines, 11.2 million wireless customers and is undertaking a national expansion program that will bring SBC service to an additional 30 markets. Internationally, SBC has telecommunications investments in 23 countries. With more than 204,000 employees, SBC is the 13th largest employer in the U.S., with annual revenues that rank it among the largest Fortune 500 companies. NOTE: The following media conference calls will be held and replayed throughout the day. General/National Media 11:15 a.m. Eastern 1-800-289-0436 Replay begins 2 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT 1-888-203-1112, passcode: 675140 Trade Media 12:30 p.m. Eastern 1-800-289-0437 Replay begins 3 p.m. EDT 1-888-203-1112, passcode: 410471 |
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