[Federal Register Volume 65, Number 25 (Monday, February 7, 2000)]
[Notices]
[Pages 5918-5919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2605]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-24271; 812-11954]


AirTouch Communications, Inc.; Notice of Application

January 28, 2000.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for an order under section 3(b)(2) of the 
Investment Company Act of 1940 (the ``Act'').

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SUMMARY OF APPLICATION: AirTouch Communications, Inc. (``AirTouch'') 
requests an order under section 3(b)(2) of the Act declaring that it is 
engaged primarily in a business other than that of investing, 
reinvesting, owning, holding, or trading in securities.
    Filing Dates: The application was filed on January 24, 2000.
    Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the SEC orders a hearing. interested 
persons may request a hearing by writing to the SEC's Secretary and 
serving applicants with a copy of the request, personally or by mail. 
Hearing requests should be received by the SEC by 5:30 p.m. on February 
22, 2000, and should be accompanied by proof of service on applicant, 
in the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street, NW, Washington, DC 20549-
0609. AirTouch, One California Street, San Francisco, CA 94111.

FOR FURTHER INFORMATION CONTACT: J. Amanda Machen, Senior Counsel, 
(202) 942-7120, or Michael Mundt, Branch Chief, (202) 942-0564 (Office 
of Investment Company Regulation, Division of Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 5th Street, NW, Washington, DC 
20549-0102 (Tel. 202-942-8090).

Applicant's Representations

    1. AirTouch is a Delaware corporation and a subsidiary of Vodafone 
AirTouch Public Limited Company (``Vodafone AirTouch''). AirTouch 
states that it is the third largest provider of cellular and personal 
communication services in the United States. Vodafone AirTouch owns 
approximately 96.8% of the outstanding voting securities of AirTouch. 
AirTouch states that at the present time it is not an investment 
company under section 3(a) of the Act.
    2. On September 21, 1999, Vodafone AirTouch entered into an 
agreement with Bell Atlantic Corporation (``Bell Atlantic'') to create 
a new joint venture (``Wireless''), a Delaware general partnership, 
through which they will conduct their U.S. wireless telecommunications 
business. AirTouch and Bell Atlantic will transfer their U.S. mobile 
telecommunications businesses and assets to Wireless (the 
``Transaction''), with AirTouch contributing approximately 46% of the 
value of its total unconsolidated assets. GTE Corp., following its 
merger with Bell Atlantic, also will contribute its cellular and 
personal communication services assets to Wireless. After contribution 
of these assets, AirTouch

[[Page 5919]]

will hold a 45% general partner interest in Wireless and Bell Atlantic 
will hold the remaining 55% general partner interest. The Transaction 
is expected to be consummated in early March 2000. AirTouch states 
that, following the Transaction, on an unconsolidated basis, 
approximately 62% of its total assets will consist of securities of 
operating companies that AirTouch controls (within the meaning of 
section 2(a)(9) of the Act), including Wireless, approximately 17% will 
consist of securities of wholly- and majority-owned subsidiaries, 
approximately 19% will consist of other securities, and approximately 
2% will consist of assets other than securities.\1\
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    \1\ Section 2(a)(9) of the Act defines ``control'' as the power 
to exercise a controlling influence over the management or policies 
of a company. That section creates a presumption that an owner of 
more than 25% of the outstanding voting securities of a company 
controls the company.
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Applicant's Legal Analysis

    1. Under section 3(a)(1)(C) of the Act, an issuer is an investment 
company if it is engaged or proposes to engage in the business of 
investing, reinvesting, owning, holding, or trading in securities, and 
owns or proposes to acquire investment securities having a value 
exceeding 40% of the value of the issuer's total assets (exclusive of 
Government securities and cash items) on an unconsolidated basis. 
Section 3(a)(2) of the Act defines ``investment securities'' to include 
all securities except Government securities, securities issued by 
employees' securities companies, and securities issued by majority-
owned subsidiaries of the owner which are not investment companies and 
which are not excepted from the definition of investment company by 
section 3(c)(1) or section 3(c)(7) of the Act.
    2. AirTouch states that as a result of the Transaction, it may meet 
the definition of an investment company under section 3(a)(1)(C) of the 
Act because Wireless will not be a wholly- or majority-owned subsidiary 
and, therefore, AirTouch's ``investment securities,'' as defined in 
section 3(a)(2) of the Act, may represent approximately 81% of its 
total assets on an unconsolidated basis.
    3. Section 3(b)(2) of the Act provides that, notwithstanding 
section 3(a)(1)(C) of the Act, the SEC may issue an order declaring an 
issuer to be primarily engaged in a business or businesses other than 
that of investing, reinvesting, owning, holding, or trading in 
securities either directly, through majority-owned subsidiaries, or 
controlled companies conducting similar types of businesses. AirTouch 
requests an order under section 3(b)(2) declaring that it is primarily 
engaged through its wholly- and majority-owned subsidiaries and 
controlled companies in a business other than that of investing, 
reinvesting, owning, holding, or trading in securities.\2\
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    \2\ If the requested order is granted, Vodafone AirTouch's 
counsel have advised Vodafone AirTouch that it is not an investment 
company under section 3(a) of the Act.
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    4. In determining whether a company is primarily engaged in a non-
investment company business under section 3(b)(2), the SEC considers: 
(a) The applicant's historical development; (b) its public 
representations of policy; (c) the activities of its officers and 
directors; (d) the nature of its present assets; and (e) the sources of 
its present income.\3\
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    \3\ See Tonopah Mining Company of Nevada, 26 S.E.C. 426, 427 
(1947).
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    (a) Historical Development. AirTouch states that it has been an 
operating company since 1984, developing mobile telecommunications 
networks and providing telecommunications services in the U.S. and, 
beginning in 1989, overseas.
    (b) Public Representations of Policy. AirTouch states that it has 
never held, and does not now hold, itself out as an investment company. 
AirTouch asserts that, in its annual reports, shareholder 
communications, prospectuses, SEC filings, and on its Internet web 
site, it consistently has held itself out to the public as an operator 
of mobile telecommunications networks and provider of 
telecommunications services.
    (c) Activities of Officers and Directors. AirTouch states that its 
officers and directors are actively engaged in the management of its 
wholly- and majority-owned subsidiaries and controlled companies 
through which AirTouch conducts its telecommunications business. 
AirTouch states that it has approximately 14,000 full-time employees, 
only two of whom spend any time on investment activities.
    (d) Nature of Assets. AirTouch states that, as of September 30, 
1999, its assets other than securities, together with securities of 
wholly- and majority-owned subsidiaries, represented approximately 65%, 
securities and controlled companies represented approximately 16%, and 
other securities represented approximately 19% of its total assets on 
an unconsolidated basis. AirTouch further states that, following the 
consummation of the Transaction, on a pro forma basis, its assets other 
than securities, together with securities of wholly- and majority-owned 
subsidiaries, will represent approximately 19%, securities of 
controlled companies, including Wireless, will represent approximately 
62%, and other securities will represent approximately 19% of its total 
assets on a unconsolidated basis.
    (e) Sources of Income. AirTouch states that for the twelve months 
ended March 31, 1999, it had net income of $844 million, of which 40.1% 
was attributable to its wholly- and majority-owned subsidiaries, 45.3% 
was attributable to controlled companies,and 14.6% was attributable to 
investments. AirTouch states that post-Transaction, on a pro forma 
basis, for the twelve months ended March 31, 1999, its net income was 
$925 million, of which 86.7% was attributable to controlled companies, 
including Wireless, and 13.3% was attributable to investments.
    5. AirTouch thus states that it meets the factors that the SEC 
considers in determining whether an issuer is primarily engaged in a 
business other than that of investing, reinvesting, owning, holding, or 
trading in securities.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-2605 Filed 2-4-00; 8:45 am]
BILLING CODE 8010-01-M