The agreement creates a US network with almost twice as many customers as AT&T Corp, the largest US wireless company. Bell Atlantic and Vodafone expect to realise $7.4bn (pounds 4.5bn) in savings and lower costs. With a national network and paying fewer carriers to com- plete their calls, they expect revenue of about $15bn.
"This creates a superior company from a financial standpoint," said Kevin Roe, an analyst at ABN Amro. "They'll be able to better compete for high- end business, and they can also offer more attractive pricing plans for the consumer market."
Vodafone and Bell Atlantic expect to complete the union in six months to a year, pending approval from shareholders and regulators. The companies said they may have to shed about 3 million customers in areas where both now provide a service. They also will pick a new brand name for the combined network.
The agreement follows Bell Atlantic's April decision to break up its PrimeCo Personal Communications joint venture with Vodafone after the UK firm won a bidding war for San Francisco-based AirTouch, Bell Atlantic's original partner in PrimeCo.
Both were left without a national network, hindering their ability to attract customers as many users want single-rate plans like those touted by AT&T. "This is the most capital-efficient way [of getting a coast-to- coast US network]," said Vodafone chief executive Chris Gent. "It brings us to market faster than any other way, and we're playing with the best team."
US mobile use is expected to rise fivefold in the next five years due to falling prices and increased quality. US subscribers now number about 79 million.Reuse content