Ma Bell's offspring already wriggling out of their regions
Kids grow up fast, and Ma Bell's seven new ''children'' are no exception. The breakup of American Telephone & Telegraph occurred only three months ago. Yet some of the newly formed regional companies are already striking out on their own, expanding beyond their geographic territories into national and international frontiers.
For example, US West - the holding company for Pacific Northwest Bell, Northwestern Bell, and Mountain Bell - announced last month the formation of a nationwide consulting service in telecommunications and office automation. The business, Interline Communications Inc., has opened offices in 10 major cities and expects to have 10 more running by May.
''What's coming through loud and clear is that companies really want a one-stop place'' to go for communications advice, says Ronald Gelok, director of Interline's Northeast division. ''They are confused by divestiture,'' he says. Interline is targeting Fortune 1,300 companies, serving up an a la carte menu that features equipment engineering, installation, maintenance, and consulting.
''It isn't a surprise'' that US West is moving ahead like this, says Richard Toole, a telecommunications analyst at Merrill Lynch. ''From Day 1, it has been describing itself as more than a telephone company.''
But US West is not the only regional holding company looking beyond its borders. ''All of them will be spending an awful lot of time in Washington with Judge Greene,'' Mr. Toole says. Harold Greene is the federal district judge who ordered the AT&T divestiture. If a regional holding company wants to pursue a business outside the divestiture guidelines, it must get Judge Greene's approval.
Right now, BellSouth, Bell Atlantic, and Pacific Telesis all have waivers pending with the judge. Their plans include an international consulting business (Pac Tel), acquisition of an equipment leasing company (Bell Atlantic), and permission to contract with NASA (BellSouth).
Why are these companies so eager to reach out and grab some new business?
''Each of these companies would like to distinguish itself and is looking for growth markets,'' Toole says. ''To get the above-average growth they want,'' they have to diversify, he says.
''To stand still is really to suffer erosion of revenues, from competition of all kinds,'' reasons Steven Welch, who heads up strategic planning at Pacific Telesis. Mr. Welch says there is little competition among the regional companies now. ''However, there is no doubt in my mind . . . that it is just around the corner.'' He sees it picking up soonest in Yellow Pages and directory publishing , equipment leasing, and cellular (mobile phone) service.
The companies with major rate cases pending (Southwestern Bell and NYNEX) do not seem to be expanding outside their regions very quickly. Robert J. Eckenrode , corporate planning vice-president at NYNEX, agrees with analysts that it doesn't make much sense to publicize new ventures when you are trying to get regulators to increase rates. However, he explains, ''we're in such a dynamic and lucrative market right now, the pressures to announce or look elsewhere are not as great as they are on some of our other friends out there.''
For instance, Donna Jaegers, an analyst at Paine Webber Mitchell Hutchins Inc., believes US West is trying to diversify quickly, not only because it sees itself as a national communications company, but because it covers a tremendous amount of rural space, which has higher operating costs than urban space. US West will be looking to new unregulated businesses to strengthen its balance sheet.
Even so, Ms. Jaegers points out, these businesses ''will not be contributing much to the bottom line'' of any of the regional holding companies for at least five years.