GTE, Bell merger go-ahead

The new company aims to become America's biggest

US regulators have given phone firms Bell Atlantic and GTE the go ahead for their $65bn merger.

The deal creates America's largest local telephone company.

(We) will make Verizon the next great brand in communications

Ivan Seidenberg, Co-chief executive designate

America's Federal Communications Commission (FCC) said the new company would have to spin off GTE's internet assets.

The new local and long-distance phone company, to be named Verizon Communications, will control about 63 million telephone lines - one third of all lines in the US.

The new company aims to offer customers the full range of fixed line and wireless phone and internet services.

Assets spun off

"The scale, scope and market reach of Verizon will position us to capitalise on the 'new economy' growth trends that are shaping communications in the US and around the world," said Ivan Seidenberg, chairman and chief executive of Bell Atlantic and designated president and joint chief executive of Verizon.

"Our ability to deliver a full plate of voice, data, internet and wireless services to all our customers will make Verizon the next great brand in communications."

Charles R Lee, chairman and chief executive officer of GTE is to be chairman and the other joint chief executive of Verizon.

The merger transforms one of the offspring of the old Bell system into the largest local phone company and wireless provider in the US.

The approval comes almost two years after the merger was announced.

The FCC accepted a plan by the companies to partially spin off GTE's long-distance assets in areas where Bell Atlantic by law cannot yet offer that service.

The new firm has promised to spend $500m to serve 250,000 new customers outside of their current territories within 3 years of closing.

That would make Verizon a rival to other Bell companies in some regions, increasing competition and offering consumers another option for local telephone service.

FCC officials said the 25 conditions placed on the deal would help to promote competition.

Vodafone Airtouch merger

Verizon will have to spin-off GTE's internet backbone - the data pipelines which cross the country carrying computer traffic.

The merger is another step in the growth of Bell Atlantic. In 1997, the company merged with Nynex - one of the other seven Bell companies created from the 1984 breakup of AT&T.

Last year, Bell Atlantic formed a wireless partnership with Vodafone AirTouch.

By adding GTE's assets, Bell Atlantic will solidify its lead in the US wireless market with 25 million customers and a wireless footprint covering more than 90% of the US.

That puts it ahead of its next largest wireless competitor, AT&T, by 14 million customers.