GTE ALL OVER THE MAP

Ameritech's sale of its St. Louis and Chicago wireless markets to GTE last week furthers a trend of recent wireless mergers and acquisitions. The implications on the wireless landscape are far-reaching.

"It puts us one step closer to offering wireless service as a national provider," said Dan O'Brien, chief financial officer of GTE. This purchase, plus GTE's pending Bell Atlantic deal, gives GTE a total of 13 million subscribers-more than any competitor, he said.

"They will have a lot of subscribers, but they won't have a nationwide presence," noted Becky Diercks, senior director of telecommunications and wireless research at Cahners In-Stat Group. GTE will still have big pockets without coverage in the West, fueling speculation about future acquisitions.

"I feel they will get into bed with AirTouch Vodafone," said Andrew Cole, senior manager of Renaissance Worldwide's wireless practice.

Because AirTouch merged with Vodafone for the synergies created by their international holdings, some believe AirTouch could sell off its U.S. wireless properties. Bell Atlantic, which courted AirTouch before the Vodafone deal, is one likely suitor. AirTouch and Bell Atlantic seem to have mended some recent differences and would make a good fit, Diercks said.

In addition to contributing subscribers, the Ameritech properties will further GTE's bundling strategy. "When you match up our footprints, we have an excellent fit," said Mark Feighner, president of GTE Wireless. GTE owns some wireline properties in the regions of the new wireless markets.

A sale in Chicago and St. Louis was expected because Ameritech and SBC Communications had overlapping properties in those markets and they were required to divest one property to gain approval for their pending merger. The decision to sell off the Ameritech properties and the decision, so far, to keep the remaining Ameritech wireless properties paints an interesting technology portrait of SBC.

If the Ameritech merger goes through, SBC will own networks operating on three different technologies. SBC owns Pacific Bell, which operates a GSM network, as well as Southwestern Bell, Southern New England Telecommunications and Cellular One, which primarily employ time division multiple access. Ameritech's network uses code division multiple access.

"Strategically going forward, it will be a problem," Cole said. "It's difficult to reap cost efficiencies with a multiprotocol network." Even with upcoming introductions of third generation networks, which may moot the difficulties of using multiple technologies, SBC faces significant challenges, he said.

Current advances in handsets and linking technologies could ease those problems, though. "I used to think the air interface was the most important thing in the world, but it's starting not to be," Diercks said.

The sale of the Ameritech properties is contingent on approval of the Ameritech/SBC merger. An investment company, Georgetown Partners, contributed 7% of the equity stake of the purchase of the St. Louis and Chicago markets. Because Georgetown Partners is a minority-run firm that contributes no telecom or marketing experience to the deal, some have speculated that Ameritech and SBC hoped to please the FCC and win approval of their merger by introducing more minorities to the telecommunications industry.