TBO.com - TBO is Tampa Bay Online

Verizon Wireless Agrees To Buy Alltel For $5.9 Billion

Associated Press file photo

The size of the combined Verizon-Alltel company would surpass AT&T Inc., with 71.4 million subscribers.

ADVERTISEMENT

The Associated Press

Published: June 5, 2008

NEW YORK - Verizon Wireless has agreed to buy Alltel Corp. for $5.9 billion, which would make it by far the largest cellular carrier in the U.S.

Verizon Wireless would also assume $22.2 billion in debt in the deal, bringing the total value to $28.1 billion, the parties said Thursday.

Alltel has 13.2 million subscribers in 34 states, mainly in rural areas away from the coasts. Added to Verizon Wireless 67.2 million subscribers, the size of the combined company would surpass AT&T Inc., with 71.4 million subscribers.

Federal regulators will likely take a very hard look at the deal to see if and how much it reduces competition in specific areas of the country, said John Bright, a stock analyst with Avondale Partners in Nashville. For consumers, it could be a mixed bag, he said. More competitors typically means lower prices for cellular service. "But to the extent that the combined companies enable a higher quality of service, for consumers, that's a positive," he said.

Shares of New York-based Verizon Communications Inc., the controlling parent of Verizon Wireless, rose $2.17, or 5.9 percent, to $39.15 on the news. Verizon Wireless' other parent is Vodafone Group PLC of Britain, with a 45 percent share of the joint venture.

Verizon Wireless expects that the deal to add immediately to earnings, excluding transaction and integration costs. It expects the deal to generate "synergies" of more than $9 billion due to reduced capital expenditures and operating expenditures.

In a statement, Verizon Communications Chairman and Chief Executive Ivan Seidenberg said Alltel is a "a perfect fit," given its valuable customer base and solid financials. He also pointed to the fact that the carriers share the same network technology. AT&T uses an incompatible technology.

The deal comes just seven months after Alltel was sold to TPG Capital and a unit of Goldman Sachs Group for $24.7 billion.

Tribune reporter Richard Mullins contributed to this report. He can be reached at (813) 259-7919 or rmullins@tampatrib.com.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT