GTE Sells Lines for Video, Data Play

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GTE Corp.'s pending sale of nearly 1.6 million
telephone-access lines in 13 states will be used to finance other ventures, particularly
in video and high-speed Internet services.

GTE announced its intention last week to sell the lines --
all of its telephone lines in Alaska, Arizona, Arkansas, Iowa, Minnesota, Nebraska, New
Mexico and Oklahoma, and some in California, Illinois, Missouri, Texas and Wisconsin.

GTE spokeswoman Nancy Bavec said the proceeds of the sale
would be used to increase the company's presence in certain high-growth markets,
including video and asymmetrical-digital-subscriber-line services.

The asset sale is part of an overall corporate plan,
announced in April, to generate between $2 billion and $3 billion for redeployment into
other, "higher-growth strategic initiatives."

Bavec said the company has set a minimum price for its
access lines, declining to reveal it. However, she added that given current market prices
for similar communications infrastructure, the sale could bring GTE very close to its goal
of $2 billion to $3 billion.

GTE has also announced its intention to sell its Airfone
unit, which provides airplane-to-ground communications in passenger aircraft.

Bavec said GTE has already received inquiries from nearly
300 different companies about buying the access lines, and it expects to have definitive
agreements in place by mid-1999. She added that the company could announce its first deal
as early as the first quarter.

The sale does not mark GTE's exit from the telephony
business, but rather, a strategy to cluster its operations. The company currently has 21.5
million domestic access lines.

"When you look at where these properties are, a lot of
them are fairly isolated from our major markets," Bavec said. "This [sale] will
improve costs and increase operating efficiencies."

Bavec added that much of the money gleaned from the asset
sales would be pumped into data services.

"Over the years, GTE has been refocusing on data
initiatives," she said. "Internet, data, ADSL -- those are all the kinds of
things that we are looking at."

GTE has been one of the more aggressive telephone companies
regarding ADSL -- it was the first telco to offer the service. And that aggressive stance
will not diminish, Bavec said, adding that the company plans to have ADSL deployed in 300
central offices in 16 states by the end of the year.

Bavec said there was also a possibility that the
company's wireless cable operation in Hawaii could be earmarked for expansion.

"If you look at cable, it is a form of data,"
Bavec said. "We're currently constructing a new, fiber optic, IP-based [Internet
protocol] network that will carry data in all of its forms. Video is basically a piece of
that. We realize that growth is exploding. The demand for ADSL is absolutely
incredible."

GTE's wireless cable operation has come under scrutiny
ever since the company agreed to be bought out by Bell Atlantic Corp., the
Philadelphia-based regional Bell operating company, in a deal estimated to be worth $52.8
billion. That deal is still subject to shareholder and federal approval.

Once a large investor in the wireless cable arena, Bell
Atlantic divested its wireless cable holdings in 1996. The company has since changed its
focus in the video market to reselling direct-broadcast satellite service from DirecTv
Inc.

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