Latino Investor Group in Deal With GTE : Telecom: Start-up DBA Communications would buy firm’s local businesses in N.M. and parts of Texas.

In an important boost for minority business ownership in the U.S., a group of high-powered Latino investors struck a deal to buy GTE Corp.’s local phone businesses in New Mexico and parts of Texas.

The purchase by start-up DBA Communications, announced late Tuesday, would instantly create the nation’s largest Latino-owned local phone company, ideally situated to tap a lucrative minority market.

Under the deal, the DBA Communications partnership would take over nearly 400,000 mostly residential customer phone lines currently served by Irving, Texas-based GTE in the two Southwestern states, as well as a tiny portion of Arkansas.

GTE has been selling off little chunks of its local phone business, especially in rural areas where it doesn’t believe it can make much money and those areas often are better served by smaller companies. This deal is the largest in a string of such divestitures.

Terms of the transaction were not disclosed, but sources say the price tag is between $1.1 billion and $1.4 billion. The deal is expected to close by the middle of 2000, pending regulatory approvals. About 400 employees will be shifted to DBA Communications as part of the deal.

“This is the first time that Hispanics have owned a local phone company, and not just any local phone company, but the 20th-largest local phone company in the country,” said Henry Rivera, a former chairman of the Federal Communications Commission and one of the key investors in the DBA partnership. “It’s a watershed event in the communications history of this country.”

The DBA Communications partnership, based in Washington, plans to upgrade the networks that crisscross the mostly rural territories it will take over from GTE--a plan that is expected to bring underserved customers the voicemail, high-speed Internet access and other advanced features that are commonly provided in urban regions.

DBA Communications, formed specifically for the GTE purchase, recently named Anne Bingaman as its chief executive. Bingaman is a former U.S. assistant attorney general for antitrust and a former senior executive at LCI International (now Qwest Communications).

The underlying DBA Communications partnership is made up of a who’s who list of prominent Hispanics. In addition to Rivera, the investors include Toney Anaya, former governor and attorney general of New Mexico; Manuel Lujan, former secretary of the Interior in the Bush administration and a former congressman from New Mexico; Edward L. Romero, U.S. ambassador to Spain and Andorra who is active in trade matters, and several others.

The venture capital firms Welsh Carson Anderson & Stowe, Vestar Capital Partners and Citicorp Venture Capital have also invested in DBA Communications. Federico Pena, former secretary of transportation and energy in the Clinton administration, is senior advisor to Vestar Capital.

News of the DBA Communications purchase drew applause from representatives of the San Francisco-based Greenlining Institute, which long ago urged federal regulators to assign some local phone service markets--including East Los Angeles--to minority-owned entities.

“It’s a beginning, and it may foreshadow other possibilities,” said Robert Gnaizda, Greenlining’s public policy director. “Part of the attraction is that some Hispanics are driven to serve their community, and part of it is the money you could make if you serve that community differently [from the traditional phone companies].”