Florida Regulators Approve GTE and Bell Atlantic Merger

Strategic Insights -

The Public Service Commission of Florida has approved a proposed megamerger between GTE Corp. and Bell Atlantic, a move that marks a step forward in the long process of creating a gigantic phone company offering various services. The merged company, which will leave GTE as a subsidiary of Bell Atlantic, will be one of the largest telephone companies in the nation, with an estimated worth of $125 billion and an expected sales growth of 15 percent a year. The approval, while a positive step for the companies, faces further scrutiny from state and federal regulators, including the U.S. Justice Department and the Federal Communications Commission.

Key Takeaways:

  • The proposed merger between GTE Corp. and Bell Atlantic was approved by the Florida Public Service Commission in a 5-0 vote.
  • The merged company will be one of the largest telephone companies in the nation, with an estimated worth of $125 billion and an expected sales growth of 15 percent a year.
  • The approval follows the recommendation of the commission's staff, which noted that the merger is between two national parent companies not regulated in Florida.
  • Sprint was the only objector to the merger, calling for public hearings to scrutinize the deal, but this request was denied.
  • The merger will face further scrutiny from about 30 states, as well as the U.S. Justice Department and the Federal Communications Commission.
  • Analysts believe the merger is likely to bring competition to many areas, including Florida, and could lead to lower prices for consumers.
  • Some states may seek concessions from the merger applicants, such as increased employment in the state or lower rates on phone services, but Florida commissioners did not ask for any concessions.

Statistics:

  • Estimated worth of the merged company: $125 billion
  • Expected sales growth of the merged company: 15 percent a year
  • Number of states facing scrutiny regarding the merger: 30
  • Number of voters in favor of approving the merger: 5 (out of 5 Public Service Commission members)
  • Number of objectors to the merger: 1 (Sprint)
  • Number of days the public has to comment on the decision: 21

Sources:

  • "Florida regulators approve GTE-Bell Atlantic merger", Reuters, 1996