Bell Atlantic, Vodafone Plan Verizon IPO

Bell Atlantic-GTE will own 55% of Verizon and Vodafone will own the remainder.
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Bell Atlantic

(BEL)

and

Vodafone AirTouch

(VOD) - Get Report

announced on Tuesday that they planned an initial public offering of their newly formed wireless business,

Verizon Wireless

.

"We intend to capitalize on the value of this business, and at a recent board meeting, the board directed the management team to begin the planning for an initial public offering of Verizon Wireless," Ivan Seidenberg, chairman and chief executive of Bell Atlantic, said in a statement.

Bell Atlantic was up 1 7/8, or 3%, to 64 15/16 while Vodafone was down 3 1/8, or 6%, to 52 3/8 in afternoon trading. (Bell Atlantic closed up 11/16, or 1%, at 63 3/4 while Vodafone closed down 3 7/16, or 6%, at 52 1/16).

Although details of the IPO were not released, a Bell Atlantic spokesman said that the companies would spin off Verizon Wireless rather than issuing a tracking stock.

"This will be an offering of equity in a subsidiary. It will not be a tracking stock," said spokesman Dave Frail, adding that the companies would look to conduct the IPO "as soon as possible."

Verizon Wireless, a merger of Bell Atlantic's and Vodafone AirTouch's U.S. cellular, paging and PCS businesses, was formally combined on Monday. The venture brings together Bell Atlantic's East Coast business and Vodafone's West Coast operations.

The companies said Verizon Wireless would have additional muscle in the U.S. market after the completion of Bell Atlantic's merger with

GTE

(GTE) - Get Report

, slated for the second quarter. Once that merger is completed, Verizon will have more than 24 million wireless and nearly 4 million paging customers, making it the largest cellular company in the U.S., covering 90% of the American population.

The companies plan to invest more than $3 billion in Verizon Wireless' nationwide network this year, enabling it to go head-to-head with leading competitors,

AT&T

(T) - Get Report

and

Sprint PCS

(PCS)

.

After the close of the merger, Bell Atlantic-GTE will own 55% of Verizon Wireless and Vodafone will own the remainder. Bell Atlantic will designate four of the company's board members and Vodafone will appoint three. The company is headquartered in New York City and Bedminster, N.J.

Analysts applauded the planned IPO saying that it would help buoy both Bell Atlantic and Vodafone in addition to offering an alternative to other wireless stocks.

"Wireless stocks are more highly valued than wired stocks -- that should be helpful to the parent companies," said Robert Wilkes, an analyst with

Brown Brothers Harriman

. "This will make Bell Atlantic potentially more valuable."

Wilkes declined to disclose his rating for Bell Atlantic. His firm does not do underwriting.