Washington SBC Communications Inc. and BellSouth Corp. agreed Wednesday to sell wireless business in 16 markets, including Los Angeles, Indianapolis and New Orleans, in order to win Justice Department approval of a joint venture in wireless telephone service.
The department simultaneously filed a lawsuit to block the deal and an agreement with the companies that would settle that lawsuit, if, as expected, the agreement is approved by the U.S. District Court.
"Today's action by the department ensures that this joint venture will not reduce competition in these local markets," said Assistant Attorney General Joel I. Klein, head of the department's antitrust division. "Without the divestitures " wireless customers in 16 markets, large and small, would have had fewer choices and faced the risk of higher prices and lower quality service."
The government's lawsuit alleged that the original deal would have reduced competition significantly in those markets for wireless mobile telephone service by eliminating head-to-head competition between SBC and BellSouth's wireless units.
The proposed consent decree would ensure that the joint venture would not increase concentration in any geographic market, the department said.
The venture, still subject to Federal Communications Commission approval, would create the second-largest U.S. wireless business, behind leader Verizon Communications, with more than 18 million customers.
"This approval is a major step toward the launch of a world-class national wireless company," said Stephen Carter, president and chief executive officer of the joint venture company.
The companies agreed to sell their interest in one of the two overlapping wireless businesses they own either in whole or in part in the 16 markets, which together have more than 20 million residents.
The nine urban systems to be sold are in Los Angeles; New Orleans and Baton Rouge, La.; and Indianapolis, Anderson, Bloomington, Lafayette, Muncie and Terre Haute, Ind. Rural systems to be sold are in Louisiana and Indiana.
Based in San Antonio, SBC provides local telephone service in 13 states. Among them is Kansas, through SBC-owned Southwestern Bell.
SBC also provides mobile, cell phone or other wireless mobile phone service in those states, except Nevada.
SBC is the nation's third-largest wireless mobile phone provider with 11.2 million subscribers nationwide and 1999 revenues of more than $49 billion.
Atlanta-based BellSouth provides local phone service in nine states. It also provides cell phone service in these and some other states.
A major wireless provider, BellSouth has 5.6 million subscribers nationwide and reported 1999 revenues of more than $25 billion.