AirTouch Communications Inc. on Thursday renewed a deal to buy US West Inc.’s domestic cellular phone business, paying the Baby Bell a higher price than an offer scuttled five months ago by the elimination of a federal tax loophole.
The new agreement would make San Francisco-based AirTouch the second-largest mobile-phone telephone provider in the nation, behind AT&T; Corp.
AirTouch is offering $4.3 billion in common and preferred stock for Denver-based US West Media Group’s wireless phone interests and said it would assume $1.4 billion in US West debt.
Under the plan killed last year, AirTouch would have paid US West shareholders about $2.3 billion in stock and would have assumed $2.2 billion in debt.
Another difference is the new plan calls for AirTouch to give the stock to the company instead of shareholders, who wouldn’t have paid taxes on the stock under the old federal law. AirTouch was able to include more stock value in its deal because its stock has roughly doubled in price since the initial agreement.
“The net of all this is it’s very positive for US West, it’s very positive for AirTouch,” said telecommunications analyst Raghu Ram of Wheat First Butcher Singer.
The agreement, subject to government approval, is expected to be completed by the summer.
If finalized, US West Media Group, the US West unit that owns the cellular-phone business, would concentrate on its core businesses of selling domestic cable service and overseas cable, telephone and wireless service.