NEW YORK - Large equipment rental companies are divided on the future of rental rates, according to a new Merrill Lynch industry survey.

Twenty-nine percent of larger operations (more than $2 million in annual revenues) anticipate higher rates and 29 percent expect them to decline. The smaller companies ($2 million or less in annual revenues) were slightly more upbeat, with 36 percent forecasting increases and 18 percent seeing declines.

Overall, just 33 percent of the survey respondents expect their rates to increase in 1999, while 22 percent expect rates to decline. More than two-thirds of all respondents expecting rate declines indicated the magnitude could be more than 6 percent.

Other highlights of the survey included:

* Smaller rental operations expect their revenues to increase 87 percent this year, compared with 80 percent predicted by the larger companies.

* Eighty-three percent of those polled expect their expenditures on rental equipment in 1999 to exceed spending over the previous year.

* On a unit basis, respondents' aggregate fleet is expected to increase by 6 percent in 2000 compared to 1999.

* Consolidation discussions remained active, with two-thirds of the respondents having been contacted within the past year regarding the possible sale of their operations.

* An outsourcing trend is in force as an increasing percentage of those polled indicated that their customers rent to avoid the large capital outlays associated with a purchase.

* United Rentals is decidedly the most visible company with an increasing presence in survey respondents' territories. Caterpillar stores and Hertz Equipment Rental Corp. were also cited by more than 40 percent of the respondents.

Merrill Lynch polled nearly 100 companies with operations in 27 states and with annual rental revenues ranging from $150,000 to well over $10 million. Fifty-seven percent of the respondents reported annual rental revenues of $2 million or less. Although the larger operations accounted for less than half the total responses, they control 82 percent of the equipment fleet owned by the respondents in total, according to the survey.

Seventy-one percent of the companies polled indicated that equipment rental is their primary business, compared with 29 percent who are primarily new equipment distributors who also deal in rental equipment.