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ConTel Corporation (Continental Telephone) was the third largest independent phone company in the United States prior to the 1996 telecom deregulation. It was acquired by GTE in 1991.
Early 20th Century
ConTel Corporation's earliest predecessor, Telephone Communications Corporation, was founded by Charles Wohlstetter. After working as a Wall Street runner in the 1920s and as a Hollywood screenwriter in the 1930s, Wohlstetter returned to Wall Street in the 1940s and became a financier. In 1960 he made what he would later call a bad investment in an Alaskan oil company that would become the impetus for ConTel. To help turn that investment around, Wohlstetter raised $1.5 million to form a holding company, Telephone Communications Corporation. Some 30 years later, Wohlstetter's $1.5 million investment had grown into a company that had acquired and consolidated more than 750 smaller companies with total corporate assets hovering around $6 billion.
One of the company's first acquisitions was Central Western Company, which merged with Telephone Communications in 1961 to form the new parent Continental Telephone Company. The acquisition of Central Western, along with Harfil, Inc., provided the company with customer billing, general accounting, and toll separation services.
Continental based its early acquisition strategy on Kriegsspiel, a historical war game German generals played at Prussian war colleges. Wohlstetter applied the tenets of the game to telephone company operations and amassed detailed information on each independent telephone company in the United States.
Many of the early acquisitions were made through exchanges of stock, including the 1964 merger with Independent Telephone Company that doubled the company's size and changed its name in the process to Continental Independent Telephone Corporation. By the close of 1964, Continental had acquired more than 100 companies operating in 30 states.
The company adopted another new name, Continental Telephone Corporation, in 1965. Also during 1965 Continental acquired 65 more telephone companies and again doubled its size. By 1966 Continental had acquired more than 500 independent companies, had become the third-largest independent telephone company in the United States, and was one of the youngest companies ever listed on the New York Stock Exchange.
By 1970 Continental's assets had topped $1 billion, and sales volume had risen to $120 million. Aside from its dominating telephone business, the company's activities by that time had grown to include cable television systems, directory publishing, equipment leasing, and data services.
With the number of small independents having diminished considerably by 1970, Continental's pace in acquiring telephone operating companies was reduced. Continental sold its cable television business in 1971, and after a sluggish economy had taken its toll on Continental's manufacturing and supply subsidiaries, those, too, were sold in 1976. Maguire resigned in 1976 because of health problems and was succeeded as president by James V. Napier, a former executive vice-president. That same year, Continental became the first telephone company outside the Bell system to install a digital telephone switching system, a move that provided improved network operating efficiency, allowed the introduction of new calling features, and started the transition away from operations dominated by rural service areas.
In response to the changing regulatory climate of the telephone industry, in 1978 Continental mapped out a diversification strategy into non regulated businesses. Continental's first diversification move came in 1979, with the acquisition of Executone, Inc., a New York-based communications equipment maker.
By 1980 Continental had two million telephone access lines in service and had established its first fiber-optic cable, a high-speed, high-capacity telecommunications transmission mode. While Continental continued the process of upgrading its telephone operations, during the early 1980s the company's focus turned to greater diversification.
In July 1980 Continental entered the satellite business through a joint venture with Fairchild Industries, and a communications partnership firm, American Satellite Company, was formed to operate a network of earth-based stations that provided voice and data services. To provide technology services to accommodate its expanding needs, Continental then acquired two consulting and research firms, Network Analysis Corporation and International Computing Company.
In 1981 Continental acquired Page Communications Engineers Inc., later renamed ConTel Page, which gave Continental expertise in the engineering, installation, and maintenance of satellite-to-earth stations. One year later, Continental hooked up with Fairchild Industries in a second joint venture called Space Communications Company, a provider of tracking and relay data services for such clients as the NASA.
After the Federal Communications Commission opened the door to licenses for 30 cellular phone markets in 1981, Continental plunged into that field as well, acquiring sizable shares of cellular markets in Los Angeles, California; Washington, D.C.; and Minneapolis, Minnesota. Continental also entered the credit card authorization business in 1981, with the purchase of National Bancard Corporation. Two years later, Continental bolstered its interest in that business segment with the purchase of the Chase Merchants Services division of Chase Manhattan Bank.
In 1982 the corporation changed its name to Continental Telecom Incorporated, adopted a new corporate logo, and inaugurated an advertising campaign around the theme "architects of telecommunications." Continental's expansion into the information services sector continued in 1982 with the purchase of STSC Inc., a computer services supplier; and Cado Systems Corporation, a maker of small business computers. That same year company revenues surpassed the $2 billion mark for the first time.
In 1984 Continental formed the subsidiary ConTel Cellular Inc. to handle the corporation's growing cellular operations. A year later, Continental culminated its diversification moves and reorganized into four business sectors: telephone and cellular operations; business systems, offering voice and data processing products and services; federal systems, handling various facets of communication and information systems for government agencies; and information systems, offering telecommunications systems and services to large corporations, institutions, and government entities.
As a result of the company's growing interest in the information services marketplace, in 1985 Continental acquired several computer system and software companies, including Northern Data Systems, Data Equipment Systems Corporation, and Sooner Enterprises, Inc. Continental also purchased Fairchild Industries's interests in American Satellite Co., later renamed ConTel ASC, and Space Communications Company.
That same year, Continental sold its directory publishing division, its time-share services business, and its credit card authorization business. In the midst of reorganization in 1985, Napier resigned, and John N. Lemasters, former American Satellite Company president, was named president and chief executive officer.
Continental's telephone operations were repositioned during the mid-1980s through numerous sales and exchanges. Subsidiaries in Nebraska, Colorado, Alaska, the Bahamas, and Barbados were sold, and operations in Michigan were exchanged for similar operations in Indiana and three southern states.
The name ConTel Corporation was adopted in 1986. That same year, ConTel's new tenant services division set the stage for future growth by acquiring tenant service operations in Atlanta and Seattle. In September 1986 ConTel announced it had agreed to merge with Communications Satellite Corporation (Comsat), but by mid-1987 ConTel had called off the deal, citing Comsat's unstable financial picture. ConTel acquired Comsat's international private-line business and its very-small-aperture terminal (VSAT) satellite business in 1987, as well as Equatorial Communications Company, a provider of private satellite data networks. That same year, ConTel agreed to sell Executone, its troubled telephone interconnect business, and Texocom, ConTtel's equipment supply business.
In the late 1980s, ConTel continued to narrow its focus in the information systems sectors. In 1988, it sold its computer-based business, ConTel Business Systems, and a year later disposed of ConTel Credit Corporation. ConTel Federal Systems continued to grow during that same period, and in 1988 it acquired two Eaton Corporation subsidiaries: Information Management Systems and Data Systems Services. Two years later ConTel purchased Telos Corporation, with expertise in government-preferred computer software. ConTel's tenant services and cellular businesses also got a boost in 1988 with the acquisition of RealCom Communications Corporation, an IBM tenant services subsidiary, and Southland Mobilcom Inc.'s interests in the Mobile, Alabama, and the Pensacola, Florida, cellular markets.
Acquisition by GTE
In 1990 ConTel completed the biggest acquisition in its history, a $1.3 billion purchase of McCaw Cellular Communications, Inc.'s controlling interests in 13 cellular markets, which added more than six million potential customers and doubled ConTel's cellular potential population market (known in the industry as POPs). While important, that move was eclipsed by the merger with GTE announced later that same year. Through that transition, the two former competitors were expected to integrate telephone and mobile-cellular operations and capitalize on business unit similarities in the field of satellite communications as well as in communications systems and services targeting government entities.
Following action or review by more than 20 governmental bodies, in March 1991 the merger of GTE and ConTel was approved. Over half of ConTel's $6.6 billion purchase price, $3.9 billion, was assumed debt. When Charles Lee succeeded James (Rocky) L. Johnson to become CEO in 1992, his first order of business was reduction of that obligation. He sold GTE's North American Lighting business to a Siemens affiliate for over $1 billion, shaved off local exchange properties in Idaho, Tennessee, Utah, and West Virginia to generate another $1 billion, divested its interest in Sprint in 1992, and sold its GTE Spacenet satellite operations to General Electric in 1994. As of 2012, the Contel logo appears on the site map of Verizon's website, as to maintain the trademark.
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- "GTE Corporation - Company History". Fundinguniverse.com. Retrieved 2012-05-15.