SAN FRANCISCO — Pacific Telesis Group won approval from state regulators Tuesday to spin off its cellular telephone business into a separate company without making any substantial payment to ratepayers.
The decision, which came with some modest conditions, paves the way for Pacific Telesis to begin the public sale of $1.2 billion in stock, about 12% of a new company to be temporarily called Pactel Corp. The remaining shares in the new company, whose cellular, paging and vehicle-location services are valued at $10 billion, will be sold after a waiting period of several months.
Pacific Bell and Nevada Bell, highly profitable local phone companies, will remain with Pacific Telesis.
The Pacific Telesis board voted late Tuesday to proceed with the public sale of stock in its wireless business.
"The world's financial community was watching and the PUC voted yes," Sam Ginn, Pacific Telesis chairman and chief executive, said in a statement. "The commission sent a strong signal that California is open for business."
Since December, the wisdom of Pacific Telesis' breakup strategy has been called into question as other regional phone companies have taken the opposite tack, rushing to form alliances with cable and other businesses. Bell Atlantic Corp., for example, recently made a roughly $30-billion bid for Tele-Communications Inc., a large cable outfit.
But Pacific Telesis maintains that a split will free the new entity of burdensome government regulation and spur the growth of both companies because they can enter businesses that have been off limits under antitrust provisions that broke up AT&T in 1984 and created Pacific Telesis and six other regional Bell companies.
The company has also contended that its cellular business was built with investors' funds, not ratepayers', and that ratepayers are thus not entitled to any reimbursement for the spinoff.
Pacific Telesis got what it wanted after three postponements in October. On Tuesday, the five members of the California Public Utilities Commission voted unanimously at their regular meeting here to allow the spinoff.
But two commissioners, Gregory Conlon and Daniel Wm. Fessler, vowed to file a partial dissent because they agreed with consumer advocates that ratepayers are owed significantly for having helped finance development of the technology that led to the now booming wireless communications.
