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Verizon to Buy Price Unit for $1.5 Billion

Wireless: The company will gain a Southeast presence, while saving in spectrum license auction.

November 16, 2000|From Associated Press

NEW YORK — Verizon Communications Inc. said Wednesday its wireless subsidiary will pay more than $1.5 billion in stock for Price Communications Corp.'s wireless business, a move that could save it millions in an upcoming wireless auction by the U.S. government.

New York-based Verizon also said it will assume $550 million in debt for Price's wireless operations in 16 markets in Florida, Georgia, Alabama and South Carolina.

Price Wireless markets cellular service under the Cellular One brand. It has more than 475,000 subscribers.

Brian Wood, a spokesman for New Jersey-based Verizon Wireless, said the acquisition gives the company a wider presence in the Southeast. He said the Cellular One brand will be converted to Verizon and the network will be upgraded from older analog service to digital, giving customers access to wireless Internet and clearer calls.

The deal is subject to shareholder and regulatory approval and is expected to be complete after Verizon Wireless holds its initial public offering next year. If Verizon's IPO isn't completed by Sept. 30, the deal will be called off.

Robert Price, president and chief executive of Price, said his company didn't have the money to expand its network and bid for more licenses next month.

The deal includes New York-based Price's network infrastructure, 41 company-owned retail stores and a regional call center in Atlanta.

Patrick Comack, an analyst with Guzman & Co. Investment Bank in Miami, said Verizon's decision could indicate a fierce bidding process for upcoming spectrum licenses by the Federal Communications Commission.

Next month's auction features additional air-wave spectrums for which wireless companies can bid. The additional space will let them deliver new services or expand the coverage of their existing wireless service.

"It was an expensive purchase and obviously Verizon did the math and felt it would be more economical to buy it from Price than off the auction," Comack said.

Verizon Wireless has more than 26 million subscribers across the United States. Its parent, Verizon, was formed earlier this year when Bell Atlantic bought GTE.

On the New York Stock Exchange, shares of Price Communications closed off 19 cents at $20.88, while Verizon fell $1.56 to close at $54.19.

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