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AT&T buying some of Verizon's Alltel assets for $2.35B
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AT&T will buy a large portion of the assets rival Verizon Wireless was required to divest from as a condition of its acquisition of Alltel for $2.35 billion, the company announced late Friday. AT&T also said it was selling certain Centennial Communications assets to Verizon for $240 million.
The deal between the nation's two largest wireless carriers will give AT&T 1.5 million new subscribers in 79 service areas spread across 18 states. Verizon was required to divest from 105 markets as a condition of its $28.1 billion acquisition of Alltel, which closed in early January.
The former Alltel subscribers had used CDMA technology, and will have to be converted to AT&T's GSM-based network. AT&T said that the conversion will take no longer than a year from when the deal closes, and will result in an additional planned capital investment of around $400 million over 2009 and 2010.
Additionally, Verizon will get around 120,000 subscribers in five service areas in Louisiana and Mississippi when the deal to acquire Centennial closes. AT&T bought Centennial for $944 million last November. Both deals require regulatory approval and are expected to close in the fourth quarter of 2009.
AT&T took care not to buy assets in territory where it would have too much market share and clout, and thereby attract the attention of antitrust regulators, according to a report in the Wall Street Journal. The Obama administration has recently signalled that it would be strengthening antitrust regulations in an effort to curb companies form using their dominance in a market to block smaller rivals from getting increased market share.
Verizon will likely have to divest more assets later if the deal goes through. Last month, Verizon had sought a 60-day extension from the FCC to sell the divested assets. An FCC spokesman confirmed to FierceWireless that Verizon had received that extension, until July 8. The previous deadline had been May 9.
It was first reported by the Journal in February that AT&T was bidding on the assets. At the time, the possibility that AT&T could pick up the divested subscribers rankled consumer advocates, who argued that such a move would not be in the interest of customers. Since then, it has been reported that private equity groups including the Blackstone Group, Kohlberg Kravis & Roberts & Co., and the Carlyle Group made bids for the assets.
For more:
- see this article (sub. req.)
- see this article on antitrust regulations
- see this release on the Alltel deal
- see this release on Centennial
Related Articles:
Verizon requests more time to sell Alltel assets
Blackstone makes bid for Verizon's divested assets
AT&T bidding for Verizon's divested assets
Verizon-Alltel deal leaves subscriber gaps
Verizon-Alltel deal to close Jan. 9
Verizon gets $17B in loans to complete Alltel deal
FTC approves Verizon-Alltel deal
AT&T buys Centennial for $944M
FCC approves Verizon's acquisition of Alltel
Comments
Posted by Henry | May 12, 2009 - 8:43am
I don't think it is a good thing for AT&T to gain too much control over the market or we are going to have a monopoly. I would much rather stay with my Net10 prepaid phone which is cheap and has great reception. I fell sorry for the people who are being sold out by this deal and will have to become AT&T clients because you may find yourselves stuck in a contract and AT&T is notorious for not letting people out without paying early termination fees. I say get out as soon as you can and go for prepaid where you won't get tied down.
Posted by Anonymous | May 12, 2009 - 11:27am
AT&T acquired only the rural assest and there are remaining assets that will be re-auctioned again later. I think its a good thing when many more conusmers have access to vast stretches of America by now GSM phone users as well as CDMA on Verizon. The resources required to cover these areas are enormous and we have the two best carriers capable of doing so.
Posted by RC | May 12, 2009 - 1:48pm
The resources needed to cover these areas are enormous and the nation's rural carriers are capable of covering these areas and providing reliable, full featured wireless services to rural markets. The rural carriers do an excellent job technologically and financially bolster their local, rural economies.
Posted by dropped freedom | June 28, 2009 - 12:33am
Under the FCC's Antitrust requirement Verizon must sell off phone numbers. The Verizon phone numbers being sold have already been designated. The FCC has made it impossible for me to add a family member with one of the designated Verizon numbers to my Verizon account. Just where does government control end?
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