UNITED STATES
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: September 21, 1999
(Date of earliest event reported)
AIRTOUCH COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-12342 94-3213132
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(State or other jurisdiction (Commission file number) (I.R.S. employer
of incorporation) identification no.)
One California Street
San Francisco, California 94111
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (415) 658-2000
Item 5. Other Events
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On September 21, 1999, the parent company of AirTouch Communications, Inc.,
Vodafone AirTouch Plc ("Vodafone AirTouch"), and Bell Atlantic Corporation
("Bell Atlantic"), announced that they had entered into a definitive agreement
for the creation of a new wireless business composed of the parties' U. S.
wireless assets.
At a meeting with analysts on September 21, 1999, to provide information with
regard to the proposed new wireless business, Vodafone AirTouch and Bell
Atlantic stated that:
. in the first year following completion of the merger between Bell Atlantic
and GTE Corporation ("GTE"), they estimate that the new wireless business
will dilute the combined company's earnings per share, 3% on a cash basis and
7% on a GAAP basis;
. thereafter, they expect the new wireless business to accelerate combined
company EPS growth by more than 100 basis points, so that, in the second year
following completion of the Bell Atlantic-GTE merger, they are targeting the
combined company's earnings per share growth, excluding merger transition
charges, to be 15%-plus;
. they estimate that next year the Bell Atlantic, Vodafone AirTouch and GTE
assets that will eventually comprise the new wireless business will produce
<PAGE>
revenues of $15.6 billion, EBITDA of $6.1 billion, and net income
(pre-goodwill) of $1.7 billion.
Reference is made to the joint press release dated September 21, 1999, issued by
Bell Atlantic and Vodafone AirTouch, which is attached as Exhibit 99 and is
incorporated herein by reference.
Cautionary Statement Concerning Forward-looking Statements
In this Current Report on Form 8-K we have made forward-looking statements. For
those statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to, the following:
. changes in economic conditions in markets served by the operations of the
company which would adversely affect the level of demand for wireless
services;
. greater than anticipated competitive activity requiring reduced pricing
and/or new product offerings or resulting in higher costs of acquiring new
customers or slower customer growth;
. greater than expected growth in customers and usage, requiring increased
investment in network capacity;
. the impact of new business opportunities requiring significant up-front
investments;
. the impact on capital spending from the deployment of new technologies;
. the possibility that technologies will not perform according to expectations
or that vendors' performance will not meet the company's requirements; and
. the timing of, and regulatory or other conditions associated with, the
completion of the wireless joint venture with Bell Atlantic, and the ability
of the new wireless enterprise to combine operations and obtain revenue
enhancements and cost savings.
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits
99 Press Release, dated September 21, 1999, issued by Bell Atlantic
Corporation and Vodafone AirTouch Plc.
<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 hereunto duly authorized.
AIRTOUCH COMMUNICATIONS, INC.
By: /s/ Megan W. Pierson
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Megan W. Pierson
Vice President, General Counsel and Secretary
Date: September 24, 1999
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
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99 Press Release, dated September 21, 1999, issued by Bell Atlantic
Corporation and Vodafone AirTouch Plc.
[LOGO OF BELL ATLANTIC APPEARS HERE] [LOGO OF VODAFONE AIRTOUCH] [LOGO OF GTE]
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MEDIA CONTACTS:
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Bell Atlantic: Vodafone AirTouch:
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Susan Kraus Tim Brown
(212) 395-0500 44 16 353-3251
Jim Gerace Melissa Stimpson
(908) 306-7508 44 16 353-3251
FOR IMMEDIATE RELEASE
=====================
BELL ATLANTIC AND VODAFONE AIRTOUCH TO FORM NEW U.S. NATIONAL
WIRELESS COMPETITOR
With GTE, Will Create Coast-to-Coast Footprint
Serving Largest U.S. Wireless Customer Base
NEW YORK and LONDON, September 21, 1999 -- Bell Atlantic Corp. (NYSE:BEL)
and Vodafone AirTouch Plc (LSE:VOD; NYSE:VOD) today announced that they have
reached a definitive agreement to create a new wireless business -- with a
national footprint, a single brand and a common digital technology -- composed
of Bell Atlantic's and Vodafone AirTouch's U.S. wireless assets.
Including GTE's wireless assets, the new business, with a value in excess
of $70 billion, will serve approximately 20 million wireless customers and 3.5
million paging customers throughout the United States, making it by far the
largest wireless business in the country. The new enterprise will have a
footprint covering more than 90% of the U.S. population, and 49 of the top 50
U.S. wireless markets, with 254 million gross POPs.
The new wireless business combines assets from Bell Atlantic Mobile,
AirTouch Cellular, PrimeCo Personal Communications and AirTouch Paging. It will
be further strengthened by the addition of the cellular and PCS assets of GTE
Corp. (NYSE:GTE), which is expected to complete its merger with Bell Atlantic in
approximately the first quarter of 2000. Bell Atlantic-GTE will own 55% and
Vodafone AirTouch will own 45%. The companies expect to complete the wireless
transaction in six to 12 months.
-more-
<PAGE>
-2-
The agreement also provides that Bell Atlantic and Vodafone AirTouch will
work together on global business synergies, such as coordinated handset and
equipment purchases, global corporate account programs, global roaming
agreements, and development of new services, technologies and applications.
Ivan Seidenberg, chairman and chief executive officer of Bell Atlantic
said, "Through this combination, we are creating the leading wireless business
in the United States. This is a logical fit, naturally uniting our U.S.
properties and strong management teams, and enhancing the benefits of Bell
Atlantic's merger with GTE.
"The launch of this great new enterprise is superbly timed to capitalize on
a historic trend which is altering the future of the telecommunications industry
- -- the adoption of wireless into the mainstream of American life."
Vodafone AirTouch Chief Executive Chris Gent, said, "This agreement
represents a major step forward in our U.S. strategy. In a market where
penetration levels are relatively low but growth looks set to take off, gaining
a nationwide footprint with common technology is of paramount importance in
order to remain competitive.
"By participating in the creation of what will be the largest and best
wireless business in the U.S., eliminating the cost and complications of
alternative routes to national coverage and which should be accretive to
proportionate EBITDA from the beginning, we expect to maximise value for our
shareholders.
"In addition, the new business will achieve further benefits from close
cooperation with our other operations around the world."
GTE Chairman and Chief Executive Officer Charles Lee said, "The addition of
Vodafone AirTouch's U.S. domestic wireless assets will greatly accelerate the
execution of Bell Atlantic's and GTE's strategy to bring a new, national
full-service competitor to the U.S. telecommunications industry. The national
coverage area of the new business, with a solid presence on both coasts as well
as in the Midwest and the South, significantly increases the area in which Bell
Atlantic-GTE will offer both wireline and wireless services. It will increase
our opportunity to offer customers around the country a full bundle of
communications services. The result will be increased competition for other
national players and the creation of an engine for industry-leading growth."
-more-
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-3-
The boards of directors of Bell Atlantic and Vodafone AirTouch have
approved the transaction. The board of directors of GTE has voted in consent of
the transaction consistent with its rights under GTE's merger of equals
agreement with Bell Atlantic. The Bell Atlantic-Vodafone AirTouch wireless
agreement and the Bell Atlantic-GTE merger are independent transactions. The
completion of one is not contingent upon completion of the other.
Benefits of the Wireless Business
The new wireless business, together with GTE's wireless properties, will
have the national scale and scope to realize revenue enhancements, cost savings
and capital efficiencies, which Bell Atlantic estimates has a net present value
of approximately $7.4 billion. Vodafone AirTouch also believes that revenue
enhancements, cost savings and capital efficiencies will be significant.
Incremental revenue growth is expected to be driven by a new national brand and
enhanced product innovation.
The companies expect the new business to achieve expense savings through
reduced roaming costs, lower customer churn and increased economies of scale in
transport, billing volumes, handset purchases and advertising. Combining the
properties' common CDMA (Code Division-Multiple Access) technology platforms
will also yield capital efficiencies, simplified integration and superior
network quality.
The new wireless enterprise will offer products and services on a national
basis under a name consistent with the overall re-branding of the combined Bell
Atlantic-GTE. It will also offer enhanced value for both consumers and
businesses, including flat-rate coast-to-coast pricing plans and the accelerated
rollout of next-generation, advanced wireless data services.
Headquarters, Board and Management
The Bell Atlantic-Vodafone AirTouch wireless enterprise will be managed by
Bell Atlantic. The new wireless enterprise's board will have seven members, with
four designated by Bell Atlantic and three by Vodafone AirTouch. Mr. Seidenberg
and Mr. Gent will be board members. Once the Bell Atlantic-GTE merger closes,
Mr. Lee will also become one of the seven board members.
Bell Atlantic will nominate the chief executive officer of the wireless
enterprise, and Vodafone AirTouch will nominate one other significant officer,
initially the chief financial officer. Other leaders of the new business will be
chosen from among the three companies. Headquarters will be located in the New
York metropolitan area.
-more-
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Approval Process
The transaction will require expiration of the applicable Hart-Scott-Rodino
waiting period and approval by various regulatory authorities. The companies
will explore various options to address overlapping properties, estimated to
amount to 3 million wireless customers and approximately 49 million POPs after
the addition of the GTE properties.
The transaction will also require the approval of the shareholders of
Vodafone AirTouch. It will also be subject to the receipt of an exemptive order
from the Securities and Exchange Commission or other satisfactory resolution
regarding the application of the 1940 Investment Company Act to Vodafone
AirTouch and AirTouch Communications, Inc.
Finance and Accounting
Bell Atlantic will consolidate the revenues and expenses of the new
wireless business into its financial results, and the transaction will be
accounted for as a purchase. Vodafone AirTouch will use equity accounting for
its interest, recognizing a proportionate share of the wireless enterprise's
results based on its ownership interest.
Vodafone AirTouch and Bell Atlantic have agreed to a dividend policy for
the first five years of the combined wireless business such that 70% of adjusted
net income (after payment of taxes but before deduction of goodwill
amortization), will be distributed as dividends provided that certain credit
ratios are maintained. After the five-year period, the board will evaluate
future dividend policies.
The new business will initially assume or incur up to $10 billion in
existing and new debt. Vodafone AirTouch's recourse debt is expected to decline
by $4.5 billion.
Vodafone AirTouch can elect to sell shares through an IPO in a company
formed to hold ownership interests in the wireless business at any time after
three years from the closing of the transaction. In addition, if Bell Atlantic
were to initiate an IPO (which it could do any time after the close), Vodafone
AirTouch will be entitled to pro rata participation.
Vodafone AirTouch can also choose to put up to $20 billion worth of its
interest to Bell Atlantic or the wireless business between three to seven years
from the closing of the transaction.
Merrill Lynch & Co., Inc. and Warburg Dillon Read acted as financial
advisors and provided fairness opinions to Bell Atlantic. Goldman, Sachs & Co.
acted as financial advisor and provided a fairness opinion to Vodafone AirTouch.
Chase Securities and Salomon Smith Barney acted as financial advisors to GTE.
More details on the assets being contributed by the companies are included
in the attached table.
- more -
<PAGE>
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Bell Atlantic
Bell Atlantic is at the forefront of the new communications and information
industry. With more than 43 million telephone access lines and 10 million
wireless customers world-wide, Bell Atlantic companies are premier providers of
advanced wireline voice and data services, market leader in wireless services,
and the world's largest publishers of directory information. Bell Atlantic
companies are also among the world's largest investors in high-growth global
communications markets, with operations and investments in 23 countries.
Vodafone AirTouch
Vodafone AirTouch, based in the United Kingdom, is the world's largest
mobile telecommunications company. It has mobile operations in 23 countries on
five continents, with more than 28 million proportionate customers. Its ventures
cover a population of nearly 900 million people. In the United States, Vodafone
AirTouch serves 9 million proportionate cellular and PCS customers in 24 states
and 22 of the top 30 U.S. markets, including Atlanta, Chicago, Dallas, Detroit,
Houston, Los Angeles, Phoenix, San Diego, San Francisco and Seattle.
GTE
With 1998 revenues of more than $25 billion, GTE is a leading
telecommunications provider with one of the industry's broadest arrays of
products and services. In the United States, GTE provides local service in 28
states and wireless service in 17 states, as well as nationwide long-distance,
directory, and internetworking services ranging from dial-up Internet access for
residential and small-business consumers to Web-based applications for Fortune
500 companies. Outside of the United States, the company serves customers on
five continents. For more information about GTE, contact Peter Thonis at (972)
507-5367.
Visit www.bellatlantic.com, www.vodafone-airtouch-plc.com and www.gte.com
for information about Bell Atlantic, Vodafone AirTouch and GTE.
NOTE: This press release contains statements about expected future events
and financial results that are forward-looking and subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. Discussion of factors that may affect future results is
contained in our recent filings with the Securities and Exchange Commission.
# # #
INVESTOR RELATIONS CONTACTS:
Bell Atlantic: Vodafone AirTouch:
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John Killian Tim Brown Melissa Stimpson
(212) 395-1152 44 16 353-3251
- more -
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NOTE TO EDITORS:
SATELLITE UPLINK FOR B-ROLL:
Tuesday, September 21, 1999
8:00 - 8:30 AM (EDT)
Telstar 4 Transponder 6, C-Band,
Downlink frequency 3820
2:00 - 2:30 PM (EDT) - Including press conference footage
Telstar 4 Transponder 6, C-Band,
Downlink frequency 3820
4:00 4:30 PM (EDT) Including press conference footage
Galaxy 6 Transponder 7, C-Band
Downlink 3840
If you have any technical questions with the satellite feed for B-Roll, please
call Bret Curran, Bossert and Company, (212) 627-5622.
<PAGE>
COVERAGE MAP, PHOTOGRAPHS, BIOGRAPHIES AND LOGOS:
The coverage map of the new U.S. wireless business, photographs of the
companies' executives, biographies and company logos can be downloaded from each
company's website.
Selected Financial and Operating Information on the Assets
Being Contributed by Vodafone AirTouch, Bell Atlantic and GTE
<TABLE>
<CAPTION>
Vodafone AirTouch(a) Bell Atlantic GTE(b)
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Yr Ended 6 mths Ended Yr Ended 6 mths Ended Yr Ended 6 mths Ended
311298 30699 311298 30699 311298 30699
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<S> <C> <C> <C> <C> <C> <C>
US GAAP BASIS ($mm)
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Revenues $ 4,696 $ 2,447 $3,505 $1,934 $3,786 $2,036
Operating Profit $ 901 $ 444 $ 799 $ 371 $ 916 $ 434
Operating Profit incl Equity in Net Income
of Unconsolidated Wireless Systems $ 830 $ 455 $ 611 $ 306 $ 967 $ 459
Total Assets $14,860 $14,980 $5,781 $6,231 $6,840 $6,903
PROPORTIONATE DATA
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Proportionate Wireless Subscribers 8,656 9,295 6,541 7,088 6,718 7,016
Proportionate Paging Subscribers 3,422 3,511 - - - -
Proportionate Revenues $ 4,882 $ 2,636 $3,665 $2,097 $4,220 $2,141
Proportionate EBITDA $ 1,812 $ 954 $1,216 $ 640 $1,457 $ 760
<FN>
(a) Pro Forma for acquisition of New Vector, CommNet and 25% PrimeCo interest
of MediaOne
(b) Pro Forma for acquisition of Ameritech Cellular properties announced April
5, 1999
Note: Information on a UK GAAP basis will be available when a Circular is
distributed to Vodafone AirTouch shareholders.
</FN>
</TABLE>
