will spend up to $2 billion this year expanding
, its Internet services unit, the company said Monday.
The Irving, Texas-based telecommunications giant is unleashing Genuity as part of its proposed merger with
The plan to build what GTE termed "network infrastructure" will cost $1.8 billion to $2 billion this year, and $11 billion to $13 billion during the next five years. The announcement came three days after Burlington, Mass.-based Genuity filed for an initial public offering of up to $10 million of class A common stock.
"These are critical steps for GTE's Internet strategy and to enable Genuity to continue to capitalize on its 30 years of innovation in the Internet industry," said Charles R. Lee, the GTE chairman, in a statement.
The unit, known as
until it announced a name change just before filing for the offering late last week, takes its name from Genuity, a California Web hosting business that GTE bought in 1997.
GTE is selling the new class A shareholders 90% voting control in Genuity, keeping the remaining 10% as class B shares. But the class B shares can be converted to class C shares for a five-year period. The conversion would flip control of the unit, giving
, the new company created by the merger of GTE and Bell Atlantic, 96% of the voting power.
GTE is loosing control of the unit to appease the
Federal Communications Commission
, which is reviewing the Bell Atlantic merger.
Genuity lost $626.7 million on revenues of $750.4 million in 1999. The unit made 53% of 1998 revenues and 52% of 1999 revenues from
, the filing said.
GTE reiterated that it expects to meet the earnings and revenue expectations it has given Wall Street analysts this year. Company officials did not immediately return a call for comment. GTE shares closed Friday at 75 1/16 and did not trade before regular hours Monday morning, according to
. (GTE closed down Monday 2 9/16, or 3%, at 72 1/2).