Metromedia Will Sell Its Cellular Units

Southwestern Bell Corp. announced Monday that it is purchasing the cellular telephone and paging businesses of Metromedia for $1.65 billion.

Southwestern Bell said the properties involved in the acquisition, which is subject to regulatory approval, will include ownership interests held by Metromedia in nine cellular telephone systems. Southwestern Bell said it also will acquire paging services in 19 metropolitan areas.

“This is the most significant step we have taken thus far to expand into national and international markets,” said Zane E. Barnes, chairman and chief executive of Southwestern Bell. “Equally important, the acquisition also fits our strategy of solid, long-term growth and our philosophy of pursuing opportunities that match our expertise.”

With the acquisition, Southwestern Bell said it also will be the owner of operations that serve more than 500,000 paging service subscribers nationwide. The paging markets include the metropolitan areas of New York, Philadelphia, Boston, Washington, Chicago, Dallas, San Antonio and Los Angeles.

Southwestern Bell has operated its own cellular service subsidiary for two years. With the purchase of Metromedia’s systems, Southwestern Bell will provide cellular mobile phone service in markets with a combined population of more than 45 million people, the company said in a news release.

‘Attractive Growth Opportunity’

John W. Kluge, chairman of Metromedia, said the personal communications business is “one of today’s most attractive growth opportunities.”

“I will miss being a part of this industry segment,” Kluge said. “But I’m confident Southwestern Bell Corp. has the management, marketing and technical expertise to carry out the vision for these properties.”

Metromedia, the nation’s largest paging company, announced earlier this month that it hired Morgan Stanley & Co. to explore the possible sale of its radio paging and cellular mobile telephone business. The communications giant has been shedding assets since it went private two years ago.

Among the major cellular operations to be acquired in the cash transaction is full ownership of a system in Chicago, plus majority ownership of systems in Boston, Washington, Baltimore, Worcester, Mass., and Gary, Ind.

“Cellular telephone service is still in its infancy, but we’ve already seen better than expected market acceptance in the six systems we currently operate,” Barnes said. “In short, we’re bullish about cellular phone service and paging.”