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Bell Atlantic to break pact with AirTouch

Bell Atlantic plans to break up the wireless phone joint venture it operates with AirTouch, according to a statement filed with the federal government.

Bell Atlantic plans to break up the wireless phone joint venture it operates with AirTouch, according to a statement filed with the federal government today.

PrimeCo PCS, a mobile phone venture operating in 18 states, was jointly created by the two companies in 1994. By the end of the 1998, it had about 900,000 subscribers.

The joint venture had led to close relations between Bell Atlantic and the San Francisco-based AirTouch, eventually culminating in Bell Atlantic's bid last December to buy its mobile phone partner.

But Bell Atlantic was outbid by the U.K.-based Vodafone Group in January. The Baby Bell immediately filed a law suit against AirTouch to ensure that a "non-compete" clause in the PrimeCo agreement would not prevent the expansion of Bell Atlantic's own wireless phone operation, but executives have been vague about the future of PrimeCo in public statements ever since.

In a proxy statement filed with the Securities and Exchange Commission dealing with Bell Atlantic's merger with GTE, the company said it would dissolve the PrimeCo venture as soon as the Vodafone-AirTouch merger was complete.

Also in that statement, it was revealed that after the merger, GTE CEO Charles Lee and Bell Atlantic CEO Ivan Seidenberg will each receive multimillion-dollar payments as incentive to stay with the firm. Lee stands to make close to $14 million. (See related story)

Several warning signs of the pending breakup preceded today's filing.

GTE bought Ameritech's mobile phone assets worth close to $3.3 billion last week, including services in Chicago, Illinois, where PrimeCo also operates. This spillover would have violated the non-compete agreement if the joint venture were still in operation when the GTE-Bell Atlantic merger was closed.

A Bell Atlantic spokesman also said his company had sketched out its plans for the joint agreement in court documents filed as a part of the AirTouch lawsuit.

The company says it will continue to support the joint venture as long as it is in operation, however.

"We do continue to believe that PrimeCo is a strong business," said Bell Atlantic spokesman David Frail. "We will support the business up until the point if and when it is dissolved."

The original agreement allows either party to dissolve the venture if the other changes ownership. As a part of any dissolution, the two will divide the wireless assets, facing arbitration if they can not agree to a division.

AirTouch today declined to comment on Bell Atlantic's plans for the venture.

CEO Sam Ginn has repeatedly said he is still interested in striking some new agreement with Bell Atlantic to link their mobile phone areas, however, effectively creating a national coverage area.

The two companies still retain roaming agreements for their customers, and analysts said they would be unlikely to give those up.