BellSouth Wireless Services: Releases Benchmark Report

Linda Scott/Paul Holman

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BellSouth Wireless Services, the domestic U.S. wireless operations of BellSouth Corporation, is the sixth largest wireless provider in the U.S., providing cellular and PCS services.

Owing to strong organic subscriber growth, BellSouth Wireless’ subscriber base has grown to 5,337,000 subscribers (on a proportionate basis) as at the end of 1999. Its cellular and PCS networks cover a population base of 57 million people in 153 large and small markets, primarily in the southeastern U.S. With the popularity of volume-priced rate plans, an increase in total customer acquisition costs and the introduction of service in 15 new PCS markets, EBITDA margins were reduced to below 40% during 1999, yet still remain above the average for the wireless telco providers.

The recent merger announcement of the wireless operations of BellSouth and SBC comes as no surprise. Given the recent mergers in the industry to increase size and service areas, and a failed takeover bid for Sprint, the pressure was on BellSouth Wireless to expand its coverage. The merged BellSouth-SBC wireless operations will be the second largest wireless provider with 16.2 million subscribers reaching 40 of the top 50 U.S. markets.

The two wireless operations are a good fit with little market overlap and similar technology platforms, and create a new national network to compete with the other existing national networks Verizon Wireless (Bell Atlantic-GTE-Vodafone AirTouch), AT&T, Sprint and Nextel. The new entity, which will cover approximately 70% of the population of the U.S.A., will still have some gaps in its coverage, particularly in the northwestern and central U.S.A., thus making additional acquisitions possible.