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DCR Comments on Bell Atlantic and Grupo Iusacell Transaction

CHICAGO, Nov. 26 /PRNewswire/ -- Bell Atlantic Corporation and Grupo Iusacell announced today an agreement in principle to change the ownership structure of Grupo Iusacell S.A. de C.V. Under the agreement, Bell Atlantic will assume management control over the operations of Grupo Iusacell.

Bell Atlantic will gain control of Grupo Iusacell by exchanging certain Series B and D shares plus US$50 million for a controlling interest in the Peralta group's Series A shares, and take a majority of board seats. The Peralta group will retain its current approximate ownership stake of 48 percent with Bell Atlantic continuing to own approximately 42 percent. Bell Atlantic will also lend Grupo Iusacell US$150 million in subordinated debentures convertible into Series A shares at $7 per ADS. Both parties will convert certain outstanding debt and provide interim funding convertible into additional Grupo Iusacell shares. The Peralta group will also be able to sell one-third of its interest in Grupo Iusacell to Bell Atlantic at the end of each of the next three years, at prices of $8.50, $9.60 and $10.70 per ADS, respectively.

Duff & Phelps Credit Rating Co. (DCR) expects the transaction to have a small negative impact on Bell Atlantic's credit profile. At the end of the third quarter 1996, Grupo Iusacell had approximately US$228 million of debt, all of which was dollar denominated. The additional debt arising from the transaction and the expected consolidation of Grupo Iusacell's financial results into Bell Atlantic's financial statements is anticipated to have a very modest impact on Bell Atlantic's quantitative performance. Further, Bell Atlantic's recent financial performance has been strong for its rating category. Qualitatively, the additional support and control provided by Bell Atlantic ought to strengthen Grupo Iusacell's ability to meet its strategic objectives in the growing Mexican telecommunications market.

DCR rates Bell Atlantic Financial Services' senior unsecured debt 'A+' (Single-A-Plus) and its commercial paper 'D-1+' (D-One-Plus). The senior unsecured debt of Bell Atlantic Financial Services is subject to a support agreement with Bell Atlantic. However, the long-term debt securities of Bell Atlantic Financial Services remain on Rating Watch -- down as a result of the pending merger with NYNEX Corporation. DCR will be evaluating the timing and level of expected improved financial performance, the support for parent-level debt, the ultimate capital structure and the prospective business plans of the combined entity.

Grupo Iusacell owns the nonwireline cellular license for Mexico City as well as the licenses for three surrounding regions in a market area of 62 million people. In addition to its cellular operations, Grupo Iusacell provides domestic and international long distance services.

Bell Atlantic provides local exchange service to 20.4 million access lines in seven states on the East Coast. In addition, wireless services are provided through a joint venture with NYNEX. Other communications services offered include telecommunications consulting and software systems integration. In addition to Grupo Iusacell, Bell Atlantic has a significant interest in Telecom Corporation of New Zealand.

SOURCE Duff & Phelps Credit Rating Co.
 -0- 11/26/96


/CONTACT: John C. Culver, CFA, 312-368-3216 or culver@dcrco.com, or James J. Stork, CFA, 312-368-3125 or stork@dcrco.com, both of DCR/

(BEL CEL.D)

CO: Bell Atlantic Corporation; Grupo Iusacell ST: IN: TLS SU:

MM -- NYTU090 -- 6124 11/26/96 14:00 EST http://www.prnewswire.com
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Date:Nov 26, 1996
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