Report: Verizon Wireless in talks to buy Alltel

[SBG]

Associated Press 06.05.08, 1:51 AM ET

NEW YORK -

Verizon Wireless is in talks to buy Alltel Communications LLC, the country's fifth-largest wireless carrier by subscribers, for $27 billion, according to news reports.

If consummated, an acquisition would be the biggest telecom deal since AT&T Inc. bought BellSouth Corp. at the end of 2006. Adding Alltel's 13.2 million subscribers to Verizon Wireless' 67.2 million would create the largest wireless carrier in the country, far ahead of AT&T Inc. with 71.4 million customers.

Talks are at a sensitive stage, according to CNBC and The Wall Street Journal. Both reports cited unnamed sources close to the discussions. Representatives of Verizon Communications Inc. and Alltel had no comment Wednesday.

Shares of Verizon Communications, the controlling parent of Verizon Wireless, dipped after the report, closing down 38 cents, or 1 percent, to $36.98. Verizon Wireless' other parent is Vodafone Group PLC of Britain, with a 45 percent share of the joint venture.

Little Rock, Ark.-based Alltel was a public company until it was bought out by TPG Capital and GS Capital Partners in November for $24.7 billion. It has a wide-ranging network covering parts of 35 states, mainly in the middle of the country.

A deal could save Verizon Wireless more than $1 billion per year, according to analyst Christopher King at Stifel Nicolaus. Verizon Wireless now pays hundreds of millions in roaming charges every year to Alltel, he estimated.

King also remarked that Alltel's private-equity owners would likely jump at a chance to sell, since tight credit markets could make it difficult to wrest a profit from the highly leveraged company. He expects a deal would pass regulatory review, but Verizon Wireless may have to divest radio licenses in some areas.

Verizon Wireless uses the same network technology as the majority of Alltel's network. That makes Verizon Wireless a more likely acquirer than AT&T Inc., which uses an incompatible technology. Regulatory scrutiny of an AT&T deal would also be tougher, since AT&T is the largest carrier.


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[SBG]

Ahead of the Bell: Verizon-Alltel

Associated Press 06.05.08, 8:56 AM ET

NEW YORK -

Analysts approved of a proposed combination between Verizon Wireless and Alltel Communications LLC Thursday, saying the two companies could save money in the deal.

Verizon Wireless, a joint venture between Verizon Communications Inc. and Vodafone PLC, is in talks to buy Alltel Communications LLC for $27 billion, Vodafone confirmed earlier Thursday. Alltel was sold to private equity firms TPG Capital and GS Capital Partners, a subsidiary of Goldman Sachs, for $24.7 billion in November. Several analysts were surprised that the company might be sold again, and for a similar price.

Goldman Sachs analyst Jason Armstrong said the move comes at a good time, as business trends for Alltel and for the wireless industry have improved. Subscribers are rising and data revenue is growing, he wrote. He said a combination could be "a largely beneficial move" because Alltel and Verizon share technology and are looking to grow.

Armstrong also thinks there will be few other bidders: technological differences would reduce AT&T Inc.'s interest, he said, and Sprint Nextel Corp.'s business problems will probably prevent it from making an offer.

Goldman Sachs, which is acting as a financial adviser in the transaction, subsequently removed its ratings and price target for Verizon Communications pending the negotiations.

Baird analyst William Power said the deal, if completed, would give Verizon the largest subscriber base in the industry.

Citi Investment Research analyst Michael Rollins said the deal might lead to a slight decline in shares of broadcast and communications tower operators.


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[SBG]

Verizon Wireless agrees to buy Alltel for $5.9B

Associated Press 06.05.08, 10:09 AM ET

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 said Thursday it would assume $22.2 billion in debt in the deal, bringing the total value to $28.1 billion.

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.

The parties expect the deal to close by the end of the year, pending regulatory approvals. The deal is likely to face scrutiny by the Department of Justice and the Federal Trade Commission, but analysts expect it to pass.


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[imported_elp6n]

Wonder what this will do to the billing for Alltel customers, seeing as Alltel has cheaper plans (albeit a bit different) than Verizon.

[burton2019]

Prices will go up. Still good service.

[imported_elp6n]

When I changed phone plans earlier this year I went with Alltel strictly because of the $20 per month price difference for the simple plan I wanted (although I did prefer the verizon service/customer service).
I would be mightily displeased to see my rates increase anyhow.