Cell Phones

Throughout the past few years various telecommunication giants have been scrambling to set up strategic alliances in hopes of cashing in on the fastest growing segments of the international telecommunications industry: spaceborne communications, international telephone calls, and cellular telephone. Small wonder they were enchanted with merger possibilities because growth rates in these market segments were expected to shoot through the roof. Revenues for global satellite communication services, for instance, have been projected to increase from $16.4 billion in 1992 to $125 billion 10 years later in 2006.

Mobile communications from space and broadcast satellite services also exhibit an exciting potential for runaway growth. Each of them has projected market penetration levels in the $10 billion range. International telephone calls, not including computer data transmissions, amounted to about 20 billion minutes in 1988. By 1993 that figure had grown to 41 billion minutes and by 1995 it is expected to reach 60 billion minutes.

One of the most exciting mergers occurred in August of 1993 when AT&T purchased McCaw Cellular for an estimated $12.6 billion in AT&T stock, thus making a bold and costly move into mobile communications. At the time McCaw Cellular, with its 2.5 million subscribers, was the largest cellular operator in the United States.

Industry observers noted that the match up allowed AT&T to dive into the cellular industry which, that year, racked up revenues of $7.8 billion, up 38 percent from the previous year. The deal also allowed AT&T to move one step closer to its corporate goal of allowing people everywhere to communicate "easier and faster by phone, computer, hand held devices, and other sophisticated technologies," as one industry observer pointedly observed.