PacTel to Go Public With Cellular Unit
Joining the race to cash in on Wall Street’s hunger for cellular telephone companies, Pacific Telesis Group said Wednesday that it will offer stock in its cellular telephone and paging business to the public.
San Francisco-based Pacific Telesis said it will sell 15 million common shares of PacTel Personal Communications for an undisclosed amount. A company spokeswoman declined to say how large of a stake in the unit that would be or whether, as analysts expect, Pacific Telesis will continue to own part of the operation. Such details will be disclosed next week when Pacific Telesis files a registration statement with the Securities and Exchange Commission.
In deciding to sell stock in its cellular operation, Pacific Telesis is following in the footsteps of several other companies in the industry.
US West Inc. announced Friday that it will sell $180 million of stock in its cellular telephone business, becoming the first of the seven regional telephone companies divested by American Telephone & Telegraph to try to capitalize on Wall Street’s interest in the cellular field. Bell Canada Enterprises, Canada’s largest telecommunications company, said Tuesday that it will spin off its cellular business into a new company and sell a minority stake to the public.
“Investment is a lot like football,” said Charles W. Schelke, an analyst with Smith Barney. “You’ve got to take what the defense gives you, and the market certainly seems to like cellular.”
Analysts said Pacific Telesis probably will remain the majority owner of its cellular business.
“It does make sense,” said Audrey L. Stevoff, an analyst with the Chicago-based Duff & Phelps brokerage firm. Pacific Telesis officials have been “quite frustrated over how they could get the value of their terrific Los Angeles franchise reflected in their market price,” she said.
Prices Have Fallen
The companies are trying to duplicate the success of Seattle-based McCaw Communications, whose initial public offering last month of 11 million shares at $21.75 each fetched a higher price than analysts predicted. Other large non-Bell cellular operators are also planning public offerings.
When the first cellular telephones--mobile phones generally installed in cars and other vehicles--made their appearance in 1983, they were thought of as a novelty for the rich. But improved technology and falling prices have contributed to explosive growth, said Robert W. Maher, president of the Cellular Telecommunications Industry Assn.
“We are finally reaching our stride as an industry,” he said.
The Washington trade group’s most recent survey found 883,778 cellular phones in use nationally as of June, up from 500,000 a year earlier. At the end of 1984, when many cities still were without licensed cellular operations, only 91,600 such phones were in use.
Maher predicted that the number of cellular telephones will pass the 1 million mark by year-end. About 90% of the phones are owned by businesses, about two-thirds of which are small companies.
PacTel Personal Communications operates cellular telephone systems in California, Michigan, Texas, Missouri, Georgia, Nevada and Arizona. The company, which employs 1,000, also owns a paging business and a company called Multicom, which is a sales agent in the Midwest for Bell operating company paging services.
Pacific Telesis has not reported financial data for the subsidiary, but Prudential-Bache Capital Funding said the market it serves is the nation’s third biggest, with 23 million potential customers.
