Report: Verizon Wireless in talks to buy Alltel

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

Prices will go up. Still good service.

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.

After it all goes through, they will increase for Alltel customers. They'll have to.
However, you'll enjoy being able to have access to your cell all of the world (if you travel) and the USA.
My opinion Alltel is not comparable to Verizon in terms of service, customer care, etc.

They also have more phones to choose from too.

Alltel customers worry about Verizon deal

By PETER SVENSSON 06.06.08, 1:36 AM ET

NEW YORK -

Verizon Wireless' deal to buy Alltel Corp. for $5.9 billion was applauded by investors and should mean a greater range of choices for Alltel subscribers, but some worried that Alltel's commitment to rural coverage will get lost.

Dan Yahro in Bishop, Calif., close to the border with Nevada, has two options for wireless service: Alltel and Verizon Wireless. Now that one is buying the other, he wonders what will happen.

"Alltel has twice the coverage of Verizon here. When you get into Death Valley National Park, which is where I spend a lot of time, Alltel is the only game out there," Yahro said.

Alltel's wide-ranging rural coverage in 35 states has given it 13.2 million subscribers and plenty of fans. In its area, mainly in the interior of the country and in the Southeast, it provides an alternative to the four big national carriers: Verizon Wireless, AT&T Inc., Sprint Nextel Corp. and T-Mobile USA.

John Wilfong, 29, of Alexander, Ark., said he had service on his Alltel phone everywhere when he worked as a deliveryman.

"When I used to go into a lot of fringe areas, it got a better signal," Wilfong said. "When I was living at home before I got married, my dad had Cingular and he couldn't get a signal in the house, but I could."

Having the No. 2 carrier, Verizon Wireless, swallow the No. 5 carrier, Alltel, would catapult it beyond 80 million subscribers and past AT&T Inc. to become the largest carrier in the country. It could also reduce competition in areas where Verizon Wireless and Alltel overlap.

A Justice Department spokeswoman Thursday said the agency "would be interested in looking at the proposed transaction."

Rep. Edward J. Markey, Massachusetts Democrat who chairs the House Subcommittee on Telecommunications and the Internet, said the deal "merits the utmost scrutiny by antitrust officials and telecommunications policymakers to ensure that competition and consumers are fully protected."

The deal would also mean that Verizon Wireless, along with AT&T, will pull further away from the competition. No. 3 Sprint is in financial disarray and is losing subscribers. T-Mobile USA is a distant fourth.

"Anything that makes Verizon ... bigger will draw regulatory attention," said Rebecca Arbogast, an analyst at Stifel Nicolaus.

Analysts said a likely outcome of a regulatory review would be an approval of the deal, on the condition that Verizon Wireless sells off spectrum licenses in areas where its coverage overlaps Alltel's. Ideally, that would let it maintain Alltel's coverage, while allowing another carrier to enter the market by taking over the divested license.

Verizon Wireless did not specifically address coverage questions, but spokesman Jeffrey Nelson said, "The great benefit of this relationship is to bring the best of each company together. For consumers, that means improved network coverage and reliability."

Verizon Wireless and Alltel already allow each other's customers to roam on their networks for voice calls, but they only switch over to the other network if there is no coverage at all on the home network - a weak signal is enough to keep the phone on the home network.

Alltel Chief Executive Scott Ford said customers will not see their rates or plans immediately change due to the Verizon Wireless takeover. Alltel has a popular My Circles option that provides unlimited calls to 5, 10 or 20 numbers for a monthly fee. Verizon Wireless lacks that option, but its customers actually pay slightly less on average: $51.40 per month compared to $53.64 at Alltel.

"My bill would be astronomical without My Circles," said Steve Cuccia, in Jefferson, Ohio. In addition, he likes Alltel's "truly unlimited" wireless data plan, which he uses for home Internet access. His plan is to get the best Alltel plan he can find, and hope that Verizon Wireless lets him keep it after the acquisition.

Alltel subscribers would reap some tangible benefits from the deal, like a wider range of handsets available through Verizon Wireless.

The deal could also speed the buildout of faster wireless broadband. Building out a fourth-generation network would have been a big task for Alltel. Verizon Wireless, on the other hand, has the scale to build out 4G and has unexploited spectrum licenses that cover nearly the entire country. Getting access to Alltel's cell sites will make that buildout faster and cheaper, Verizon Wireless Chief Financial Officer John Townsend said on a conference call.

On Wall Street, the deal went over well. Shares of New York-based Verizon Communications Inc., the controlling parent of Verizon Wireless, rose $1.98, or 5.4 percent, to close at $38.96, unusual for a company spending $28.1 billion including assumed debt on an acquisition. Verizon Wireless' other parent is Vodafone Group PLC of Britain, with a 45 percent share of the joint venture.

Alltel was public until November, when it was taken private by TPG Capital and a unit of Goldman Sachs Group. A group of banks financed the deal, with a view to selling the debt to investors. But the corporate credit market seized up much like the mortgage market, leaving the debt on their books.

"The banks couldn't move their paper. Because they couldn't move their paper, the debt traded at a discount," Alltel CEO Ford told reporters at the company's Little Rock headquarters. Verizon taking over the debt "puts liquidity back into the banking system. I think this is one of those things where federal regulators ... will all look at this and say, 'Thank goodness.'"

The private equity firms came out slightly ahead on the deal, but nowhere close to the huge gains that are the goal for such investments. They paid $24.7 billion for the stock and took on $2.7 billion in debt, bringing the value of that deal to $27.4 billion.

Associated Press Writer Jon Gambrell in Little Rock and AP Business Writers Chris Rugaber in Washington and Joe Bel Bruno in New York contributed to this report.


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Alltel is better here, but elsewere Verizon is better. Service wont change here though.