Yield spreads on telephone company issues have widened as the market envisions the highly regulated industry migrating closer to the industrial camp where earnings volatility is greater.

Since Bell Atlantic Co., TeleCommunications Inc., and Liberty Media Co. announced merger plans on Oct. 13, telephone issue spreads to Treasury securities have widened anywhere from five to 10 basis points, according to Joe Mullally, a vice president and senior fixed income strategist CS First Boston Corp.

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