AT&T buys Dobson in a deal worth $5.1B

Last month, private equity firms bought rural mobile carrier Alltel Wireless, now AT&T has scooped up Dobson Communications, which has a market cap of $1.73 billion and debt totaling $2.67 billion, for $2.8 billion. The price reflects an 11 percent premium over the carrier's share price, but if you include the carrier's net debt as of Q1, the total transaction value is about $5.1 billion. The rural carrier hired Morgan Stanley to explore its options. AT&T said it expects to save about $2.5 billion through overhead cuts and reduced roaming expenses.

Dobson sells wireless services under its Cellular One brand, which boasts about 1.7 million customers. About 22 percent of the carrier's revenue comes from roaming agreements with AT&T and T-Mobile USA. Dobson offers services in many Midwestern states, parts of the Southwest, Alaska and upstate New York. Dobson's top competitors include Alltel, Rural Cellular and US Cellular.

In 2001 the rural carrier hired Lehman Brothers and Bank of America to shop it around, but come November of that year the company decided not to opt for a change in control.

For more on AT&T's purchase of Dobson:
- read this article from the WSJ  (sub. req.)