SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
April 10, 2000
BELLSOUTH CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 1-8607 58-1533433
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
Room 15G03, 1155 Peachtree Street, N. E., Atlanta, Georgia 30309-3610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(404) 249-2000
<PAGE>
Item 5. Other Events
BellSouth Corporation, a Georgia corporation ("BellSouth"), and SBC
Communications Inc., a Delaware corporation ("SBC") , entered into a
Contribution and Formation Agreement, dated as of April 4, 2000 (the
"Contribution Agreement"). Pursuant to the terms of the Contribution Agreement,
each of BellSouth and SBC agreed to contribute to a limited liability company to
be formed under the laws of Delaware (the "LLC") substantially all of their
respective United States wireless voice and wireless data businesses (as more
fully described in the Contribution Agreement). Pursuant to the terms of the
Contribution Agreement, at the Closing (as defined in the Contribution
Agreement), BellSouth will own approximately 40% of the outstanding interests in
the LLC and SBC will own approximately 60% of the outstanding interests in the
LLC , with the remainder of the interests to be held by a corporation to be
formed under the laws of Delaware ("Manager") and owned equally by BellSouth and
SBC. The Closing is conditioned upon the satisfaction or due waiver of various
conditions, including the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and receipt of approvals
from the Federal Communications Commission. The foregoing description is
qualified in its entirety by reference to the Contribution Agreement.
In connection with the execution of the Combination Agreement, BellSouth and SBC
agreed to the forms of various agreements to be entered into either at or prior
to the Closing, including the terms of the Limited Liability Company Agreement
of the LLC (the "LLC Agreement"), the certificate of incorporation of Manager
and agreements for the provision of services between the LLC and each of
BellSouth and SBC, although these forms may be modified by the agreement of
BellSouth and SBC prior to Closing. The LLC Agreement is expected to govern the
LLC, but also sets forth certain relationships between and among BellSouth, SBC
and the LLC. The LLC Agreement provides that each of BellSouth and SBC will, for
as long as it holds at least 10% of the total equity securities of the LLC and
holds shares of the Class B Common Stock of Manager, only engage in the Wireless
Business (as defined in the Contribution Agreement) through the LLC, with
limited deminimis exceptions, including an ability to act as an agent or
reseller of other Wireless Businesses after the third anniversary of the
Closing. In addition, the LLC would agree that with respect to certain
telecommunications services, including local exchange calling, it would only
utilize and sell the services of BellSouth or SBC or their applicable controlled
subsidiaries when acting in the markets in which BellSouth or SBC, as the case
may be, is the incumbent local exchange carrier except in circumstances when the
LLC would be materially disadvantaged.
The LLC would be managed by Manager. Many of the important business decisions of
the LLC are to be made by the Strategic Review Committee of the Board of
Directors of Manager (the "Strategic Review Committee"). The Strategic Review
Committee would be composed of four members, with two being appointed by each of
BellSouth and SBC. Half of the members of the Board of Directors of Manager are
to be nominated by BellSouth and the other half are to be nominated by SBC. The
LLC Agreement would also provide that neither BellSouth nor SBC would be
permitted to directly or indirectly transfer their interests in the LLC, subject
to certain exceptions, prior to an initial public offering of securities of
Manager.
The Contribution Agreement (Exhibit 10(a) to this report) is incorporated herein
by reference.
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Cautionary Language Concerning Forward-Looking Statements
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In addition to historical information, this document contains forward-looking
statements regarding events and financial trends that may affect our future
operating results, financial position and cash flows. These statements are based
on our assumptions and estimates and are subject to risks and uncertainties. For
these statements, we claim the protection of the safe harbor for forward-looking
statements provided by the Private Securities Litigation Reform Act of 1995.
Factors that could affect future operating results, financial position and cash
flows and could cause actual results to differ materially from those expressed
in the forward-looking statements are:
o a change in economic conditions in domestic or international markets where
we operate or have material investments which would affect demand for our
services;
o the intensity of competitive activity and its resulting impact on pricing
strategies and product offerings;
o protracted delay in our entry into the interLATA long distance market;
o higher than anticipated start-up costs or significant up-front investments
associated with new business initiatives;
o unanticipated higher capital spending from, or delays in, the deployment of
new technologies; and
o unsatisfactory results in regulatory actions including access reform,
universal service, terms of interconnection, unbundled network elements and
resale rates.
This list of cautionary statements is not exhaustive. These and other
developments could cause our actual results to differ materially from those
forecast or implied in the forward-looking statements. You are cautioned not to
place undue reliance on these forward-looking statements, which are current only
as of the date of this filing. We have no obligation, and we do not intend, to
publicly release the results of any revisions to these forward-looking
statements to reflect events or circumstances after the date of this filing.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No.
10a Contribution and Formation Agreement, dated as of April 4, 2000,
between BellSouth Corporation and SBC Communications Inc.
(incorporated by reference from Report on Form 8-K dated April 7,
2000 as filed by SBC Communications, Inc., SEC File No. 1-8610).
99 Press Release - New Wireless Company
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BELLSOUTH CORPORATION
By: /s/ W. Patrick Shannon
W. Patrick Shannon
Vice President and Controller
April 10, 2000
BellSouth, SBC Create Nation's 2nd Largest Wireless Company with $10.2 Billion
in Revenues
New National Wireless Company to Serve 40 of Top 50 U.S. Markets, Accelerate
Wireless Data Offerings
For Immediate Release: April 5, 2000
ATLANTA, GA and SAN ANTONIO, TX -- BellSouth Corporation (NYSE:BLS) and SBC
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, 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 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 TM PDAs.
America Online plans to deliver wireless AOL applications via the BellSouth
Intelligent Wireless Networksm.
- - 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 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, 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. "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, Internet access or features like
Caller ID.
According to 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," Ackerman 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
and the European Union, 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. SBC was advised by Lazard and Salomon
Smith Barney. To view additional materials relating to this announcement, visit
the www.bellsouth.com/investor or www.sbc.com websites.
SAFE HARBOR 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 nearly 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 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.
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