Approval of Bell Atlantic-GTE Merger Close
By Matt Paolucci

The $67 billion merger between Bell Atlantic Corp. (BEL) and GTE Corp. (GTE) could receive approval from the Federal Communications Commission as early as today, according to sources close to the deal.

Under the merger agreement, each share of GTE will be exchanged for approximately 1.22 shares of Bell Atlantic. There were about 960 million shares of GTE outstanding as of March 31.

The deal would create the largest local telephone company in the United States, controlling some 63 million phone lines.

Sources say that four of the five FCC commissioners have agreed to approve the deal with certain conditions, but cautioned that a formal vote by the board has yet to be taken.

Preventing the deal from being approved by the FCC had surrounded GTE's Internet unit, Genuity Inc., which the company finally agreed to spin off in April. Genuity handles a massive amount of Internet traffic across GTE's lines. But the FCC considers this long-distance service, something Bell Atlantic is not permitted to offer without FCC approval.

Bell Atlantic in December secured FCC permission to offer long-distance in New York state only, but it could take years before it granted approval to provide long-distance throughout its local calling region of 13 states and Washington D.C. Once the combined business gets approval to offer long-distance service in at least 50 percent of Bell Atlantic's local territory, it will then be permitted to hold up to an 80 percent stake in Genuity.

The combined business, to be called Verizon Communications, will have a presence in more than 38 states, serve more than 25 million wireless customers, and cover over 90 percent of the country.

Together, the two will trump the 61 million lines that SBC Communications (SBC), which last year combined with Bell company Ameritech to create a regional phone giant.

Similar to most deals of this size, The combination of BEL and GTE has sparked criticism from some consumer advocates, who warn that a few big phone companies will now control a large number of U.S. phone lines.

Bell Atlantic launched Verizon Wireless in April, a result of its partnership with Vodafone Airtouch PLC (VOD), and subsequently began offering cellular, PCS and paging services under that name.

Verizon Communication will have a market capitalization of about $150 billion, revenues of about $60 billion annually, and a work force of 260,000.

Approval for the merger certainly has not come overnight. It has taken more than a year after the U.S. Department of Justice originally said yes to the deal, and nearly two years after the merger was first announced in July 1998.

The merger was originally valued at $52.8 billion, but Bell Atlantic's stock has climbed more than 27 percent since the deal was announced.

Shares of GTE were down $0.19 per share at $68.56, while Bell Atlantic (BEL) was down $0.75 at $56.63 in late afternoon trading.