# 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”).

# 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                     Start Printed 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] 

## 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] 

                    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] 

                    (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.

# Footnotes

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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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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3.                                                     *See Tonopah Mining Company of Nevada,*                         26 S.E.C. 426, 427 (1947).                    
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[FR Doc. 00-2605  Filed 2-4-00; 8:45 am]

BILLING CODE 8010-01-M