Mergers and Acquisitions

AT&T buys Centennial for $944M

Phil Goldstein — Mon, 10 Nov 2008 09:37:03 -0500

AT&T announced over the weekend that it had purchased wireless provider Centennial Communications for $944 million, further boosting its wireless coverage in rural areas, especially in the Midwest and along the Gulf Coast.

The deal--which, including the assumption of Centennial's debt--is worth about $2.8 billion and comes on the heels of AT&T's $275 million purchase of WiFi service provider Wayport.

The purchase still has to gain regulatory approval, but it should net AT&T 1.1 million of Centennial's customers in Puerto Rico, the U.S. Virgin Islands, the Great Lakes region and in the Gulf Coast. The move also comes less than a week after the Federal Communications Commission approved Verizon Wireless' $28.1 billion acquisition of Alltel, which will propel Verizon past AT&T as the country's largest wireless operator. AT&T currently has close to 75 million subscribers; the new Verizon entity will have about 83 million.

For more:
- see this article
- see this WSJ article (sub. req.)

Related Article:
AT&T acquires Wayport, boosts WiFi presence
Verizon's Alltel acquisition: What are the ramifications?

Alltel reports 335K net adds

Sue Marek — Tue, 04 Nov 2008 12:09:53 -0500

Alltel revealed some if its third-quarter metrics today. The carrier, which is awaiting final approval of its planned acquisition by Verizon Wireless, said that it added 1 million gross customers and 335,152 net customers bringing its total customer base to 13.8 million, up from 12.4 million in the year-ago quarter. Here is a rundown of the other key metrics:

Revenues: Revenues were $2.5 billion, a 10 percent increase over the year-ago quarter. However, the company had a $55.2 million in losses due to an increase in costs following the completion of its November 2007 merger with an affiliate of TPG Capital and GS Capital Partners.

Churn: Post-pay churn was 1.33 percent and total churn was 2.02 percent

ARPU: Average revenue per user was $55.62. Data revenue was $8.99, up 42 percent over the previous year's quarter.

For more:
- read this press release

Related articles:
Verizon says Alltel deal on track for end of year
Justice Department approves Verizon-Alltel deal

iPCS files emergency motion to block Sprint/Clearwire deal

Sue Marek — Tue, 04 Nov 2008 11:17:18 -0500

Affiliate carrier iPCS continues to be a thorn in Sprint Nextel's side. The company filed an emergency motion for preliminary injunction in the Circuit Court of Cook County, Ill., to prevent Sprint from completing its proposed merger of the Xohm WiMAX network with Clearwire to form the "new" Clearwire (along with a $3.2 billion investment from Google, Intel, Comcast and others). The FCC is supposed to vote on the proposed merger today.

iPCS' legal maneuvering is causing speculation that Sprint Nextel may be ponying up to purchase the affiliate to make this battle go away. iPCS filed a lawsuit on May 12 against Sprint claiming that the WiMAX deal with Clearwire violates an agreement iPCS has with Sprint giving it exclusive rights to provide wireless service in its territory. So far the courts have sided with iPCS. In mid-September, a Cook County, Ill. judge refused to dismiss the lawsuit brought by iPCS against Sprint and said that Sprint would have to disconnect its iDEN network in iPCS territories.

Sprint has purchased other affiliates including Alamosa PCS and Ubiquitel. iPCS is currently its largest remaining affiliate with 654,000 subscribers.

For more:
- see this article
- see this article

Related articles:
Judge refuses to dismiss iPCS lawsuit against Sprint
Court halts Sprint-iPCS suit over WiMAX

Justice Department approves Verizon-Alltel deal

Phil Goldstein — Fri, 31 Oct 2008 10:00:24 -0400

The U.S. Department of Justice has approved Verizon's proposed $28.1 billion acquisition of Alltel that the FCC is set to vote on on Nov. 4.

Antitrust regulators at the Justice Department gave their assent to the deal--which, if approved, will create the nation's largest wireless operator--on the condition that Verizon divest 100 markets in 22 states where the two carriers now overlap. The Federal Communications Commission has to give final regulatory approval to the acquisition, which was first announced in June.

"It was a very long and thorough merger evaluation," said John Thorne, general counsel for Verizon. The Justice Department "did it with terrific speed and thoroughness."

Consumer advocates have argued that the new company, with a combined 83.8 million subscribers, would stifle competition.

For more:
- see this article

Related Articles:
Verizon says Alltel deal on track for end of year
Groups protest Verizon-Alltel deal before FCC vote

Groups protest Verizon-Alltel deal before FCC vote

Phil Goldstein — Tue, 21 Oct 2008 11:23:08 -0400

A partnership of public interest groups has stepped forward to protest the proposed $28.1 billion Verizon Wireless-Alltel merger that the FCC is expected to vote on Nov. 4.

The Public Interest Spectrum Trust represents six organizations and will meet with the FCC commissioners this week to urge them to consider rules that would prevent the newly merged company from violating open access rules that apply to wireline ISPs.

In a separate report in The Wall Street Journal, Verizon said that despite Wall Street concerns over Alltel's debt, it was still planning to push ahead with the deal.

The deal, which Verizon hopes to finalize before the end of the year, is also being reviewed by the U.S. Department of Justice's antitrust division.

For more:
- see this article
- see this WSJ article (sub. req.)

Related Articles:
FCC to vote on Verizon-Alltel, Sprint-Clearwire mergers
Verizon says Alltel deal on track for end of year

Verizon divests 15 more markets before Alltel deal

Phil Goldstein — Fri, 10 Oct 2008 10:13:42 -0400

Verizon Wireless confirmed that it was divesting spectrum in 15 markets ahead of its planned merger with Alltel, which is still awaiting approval by the U.S. Department of Justice.

The $28.1 billion deal, which, if approved, will create the country's largest wireless operator, has drawn scrutiny because of anti-trust concerns. To calm some of those worries, Verizon has already divested spectrum in 85 markets. The Alltel deal is expected to go through before the end of the year.

In a letter sent Tuesday to the FCC, Verizon said it would divest in 15 additional markets, which included markets in Alabama, Arizona, Georgia, Iowa, Minnesota, Nebraska, New Mexico, North Carolina, South Carolina and Utah.

For more:
- see this article

Related Articles:
Economy could sink Verizon-Alltel deal
Verizon says Alltel deal on track for end of year

Verizon says Alltel deal on track for end of year

Jim Barthold — Mon, 06 Oct 2008 10:03:04 -0400

It would be a non-news news story to say that Verizon is on track to spend $28.1 billion to acquire Alltel by the end of the year if it weren't for a tanking economy and a less-than-sureshot regulatory environment. That painful combination makes the carrier's announcement that it's going ahead with the deal newsworthy. Verizon spokeswoman Robin Nicol says the deal remains on schedule.

Verizon Wireless announced the deal during a somewhat friendlier economic climate in June and has been under an analytical microscope as financial markets worsened and the size of the deal became riskier.

When closed--both financially and via federal regulatory approval--the acquisition would make Verizon the nation's largest wireless carrier. When the deal was announced, analysts speculated about its impact on Sprint Nextel, which will drop to a distant third and AT&T, which might need to do some acquiring of its own to keep pace. The market conditions, and Verizon Wireless' apparently bold intent to plow ahead, has quelled that speculation--at least as much as that type of speculation is ever quelled.

For more:
- see this article

Related articles:
Verizon CEO predicts layoffs for Alltel employees
Leap and others asks FCC to deny Verizon/Alltel merger

Leap, Metro PCS announce roaming deal

Phil Goldstein — Mon, 29 Sep 2008 09:40:59 -0400

Leap Wireless and Metro PCS have inked a national roaming deal that would cover both networks' present and future markets. Plus the two firms have ended all litigation between the two companies, according to a joint statement.

The roaming deal, which has an initial 10-year term, will allow the two regional carriers to provide interoperable service for their customers. The two companies, which were embroiled in merger talks last fall and into the beginning of this year, also announced a spectrum exchange program, with Leap getting 10 MHz of spectrum in Fresno, San Diego, Seattle and other Washington and Oregon markets, and Metro PCS getting 10 MHz in certain markets, including Dallas-Ft. Worth, Shreveport-Bossier City, Lakeland-Winter Haven, Florida and in other North Texas markets.

The deal brings to a head a relationship that was less than cordial last year. Leap rejected Metro PCS's unsolicited $5.5 billion offer last September, and the two were locked in merger talks and speculation for months. FierceWireless predicted in January that the two companies would merge by the end of the year, and while there is no word that such a merger is imminent, this announcement certainly adds a level of closeness between the carriers.

For more:
-see this release

Related Articles:
Auction over: Time for Leap-MetroPCS to merge?
The backstory of the deal

Comcast exec sees end of year Clearwire close

Jim Barthold — Wed, 10 Sep 2008 07:40:39 -0400

Comcast, which was a regional mobile wireless player before it sold off that "non-essential" business to Cingular back in the 1990s, is eager to get back into the space as a member of the new Clearwire joint venture which a Comcast exec expects to close late this year.

Comcast President Steve Burke predicted that the new mobile WiMAX service, which is being driven by Sprint, would let cable operators offer "wireless data speeds that Verizon and AT&T can't match" and would give Comcast a fourth piece of its services bundle to accompany wireline voice, video and high-speed data.

Clearwire's CFO John Butler fueled Burke's optimism by telling a Jefferies Group conference that the merger is on track to close in the fourth quarter of this year despite an attempt by AT&T to block the deal with regulatory authorities. A skittish financial market, he said, may also present a problem because the company feels no present urgency to tap capital markets.

For more:
- see this article

Related:
New Sprint-Clearwire deal a shot in the arm for mobile WiMAX. Article

Verizon CEO predicts layoffs for Alltel employees

Sue Marek — Mon, 18 Aug 2008 10:31:41 -0400

Verizon Wireless CEO Lowell McAdam updated residents of Little Rock, Ark., on Friday about the firm's impending merger with Alltel Communications, which is headquartered there. McAdam said that Little Rock would probably become home to a Verizon Wireless regional headquarters with about 100 employees, which is far less than the current 3,000 employees that Alltel has in the Arkansas town.

While many executive and mid-management level positions at Alltel will vanish because of the proposed merger, McAdam said it would take at least a year or so to determine which positions would be eliminated. And he also said that there may be opportunities for some Alltel employees if they are willing to relocate to other cities where Verizon has openings.

McAdam expects the Verizon/Alltel merger to close by year-end.

For more:
- see this article

Related stories:
Alltel plagued by acquisition expenses
Verizon's Alltel acquisition: What are the ramifications?

Sprint/Clearwire to AT&T: public in favor of JV

Sue Marek — Tue, 05 Aug 2008 11:44:58 -0400

Sprint and Clearwire wasted no time responding to AT&T's request to deny the planned joint venture between the two companies. Last week, AT&T said that the Sprint/Clearwire venture would eventually use spectrum leased from schools, cities and non-profits and that the planned venture hadn't fully accounted for that spectrum in its proposed merger. AT&T said that when it purchased Dobson Communications last year the FCC took into account all the spectrum that AT&T hadn't accessed yet.

In its response, Sprint and Clearwire said that nearly 100 parties including educational and religious institutions, have filed comments urging the FCC to approve this transaction. The companies said that this proves that the public interest weighs in favor of this merger. In addition, because the 2.5 MHz spectrum has historically been under-utilized, many commentators are in favor of using this spectrum. They believe that the merger will lower costs for consumers by providing new products and services based upon WiMAX.

Sprint and Clearwire also said that they thought it was ironic that AT&T, the largest telecom company in the world, wants to invoke in applicable regulatory restraints that would stifle and delay Clearwire.

For more:
- see this Sprint/Clearwire FCC filing

Related articles:
AT&T asks FCC to deny Sprint-Clearwire merger
Sprint affiliate battles Clearwire JV

AT&T asks FCC to deny Sprint-Clearwire merger

Lynnette Luna — Fri, 25 Jul 2008 11:31:13 -0400

AT&T has asked the FCC to deny the planned merger between Sprint Nextel and Clearwire. The operator, which has the largest subscriber base in the U.S., argued that the venture would eventually use spectrum leased from schools, cities and nonprofits and that the spectrum hasn't been fully accounted for in the proposed merger. Earlier this year, Clearwire and Sprint announced their intention to combine their WiMAX businesses with the help of $3.2 billion from Intel, Google, Comcast, Time Warner and Bright House.

AT&T argues that when it purchased Dobson Communications last year, the FCC took into account spectrum AT&T has not yet accessed. In its filing, AT&T states that Clearwire and Sprint "openly state that they intend to compete with other national wireless providers--including AT&T--yet they fail to make the required showings necessary for the commission's review."

AT&T said Sprint and Clearwire, in listing their spectrum holdings, have discounted some spectrum they intend to use because it isn't operational yet. If the FCC would take into account all of the combined entity's spectrum holdings, the merger would be put under much higher scrutiny, AT&T argued.

For more:
- read Dow Jones

Related story:
A breakdown of the Sprint-Clearwire deal. Sprint-Clearwire deal story

AT&T adds 1.3M subs; wireless data revenue surges

Lynnette Luna — Wed, 23 Jul 2008 10:49:39 -0400

AT&T added 1.3 million subscribers in the second-quarter and said net income increased 30 percent as the company benefited from a surge in wireless data use. The operator posted net income of $3.77 billion, or 63 cents a share, up from $2.9 billion, or 47 cents a share in 2007. AT&T's wireless business, which is the exclusive operator of the iPhone in the U.S., saw its earnings jump 91 percent as revenue increased 16 percent. Subtracting merger-related costs, profits increased 39 percent.

Still, the 1.3 million net new customers added was down 8.4 percent from last year and below Verizon Wireless' 1.5 million subscribers it added during the second quarter. Verizon Wireless released some preliminary results yesterday. Churn dropped to 1.1 percent from 1.2 percent. Revenue from wireless data service increased 52 percent during the quarter, while ARPU (average revenue per user) also increased to 3.5 percent.

Meanwhile, Apple's new iPhone 3G, which went on sale earlier this month, might not boost earnings significantly in the third quarter as AT&T is now subsidizing the device significantly to make it available for $199. It's subsidy bill might reach as high as $720 million, and AT&T already warned that subsidy costs would hurt earnings by 10 cents to 12 cents a share this year and in 2009.

For more:
- check out the WSJ (sub. req.)

Related stories:
AT&T: 95% of iPhone users surf the mobile web. iPhone story
iPhone 3G revises AT&T data pricing. AT&T story

FCC will consider Verizon/RCC merger at Aug. 1 meeting

Sue Marek — Thu, 17 Jul 2008 11:34:05 -0400

At its Aug. 1 meeting, the FCC will likely evaluate the pending $2.67 billion merger between Verizon Communications and Rural Cellular Corp. The merger, which was announced in July 2007, would allow Verizon to expand its footprint. In addition, the company said that the deal would save it more than $1 billion in synergies in reduced roaming and OPEX expenses. RCC's customer base is 716,000 and it operates in about 15 states.

Antitrust officials at the Justice Department already have indicated they would approve the deal if Verizon gets rid of some of its spectrum in six markets in Vermont, New York and Washington.

For more:
- see this article

Related stories:
Verizon Wireless income up, buys RCC
DOJ: Verizon must sell some assets to complete RCC deal

Nokia gets green light for Navteq deal

Sue Marek — Wed, 02 Jul 2008 11:31:00 -0400

The European Commission approved Nokia's acquisition of digital map data firm Navteq. The deal is supposed to close within the next five business days.

Nokia first announced its $8.1 billion acquisition of Navteq last October. Through the deal, Nokia will get access to Navteq's digital map services, which span 69 countries across six continents. The two firms had teamed prior to this deal. In 2005, they joined forces to create mobile search solutions for the handset giant's smartphones. In addition to Nokia, Navteq's corporate partners include automakers such as Chrysler, Ford, Mercedes-Benz and Volkswagen.

For more:
- see this article

Related stories:
Nokia to buy Navteq for $8.1B
Navteq invests in Acuity Mobile

Verizon in talks to buy Alltel

Sue Marek — Wed, 04 Jun 2008 16:52:35 -0400

The Wall Street Journal is reporting that Verizon Communications is in talks to acquire No. 5 wireless carrier Alltel Corp. The deal, which could be valued at around $27 billion, is complex because it includes private equity firms that purchased Alltel last year in a $27.5 billion leveraged buyout. There is still some chance it won't come to fruition because of the sensitive nature of the deal.

The acquisition would make Verizon Wireless the largest U.S. operator with nearly 80 million subscribers. Verizon currently has more than 65.7 million customers while Alltel has about 13.2 million subscribers. AT&T, currently the largest U.S. operator, has about 71.4 million customers.

This isn't the first time that Verizon has looked at Alltel. The carrier considered buying the firm last year but felt Alltel's market value was inflated.

For more:
- see this WSJ story (sub. req.)

Vodafone makes first mobile Internet acquisition

Lynnette Luna — Tue, 20 May 2008 11:39:43 -0400

Vodafone made its first acquisition in the mobile Internet space, paying $49 million in cash for Zyb, a private Dutch company that provides social networking and contacts management technology--two hot applications in the mobile space. Zyb enables mobile users to back up their contacts on a website and offers IM services and calendar-sharing with other users online, a service that could morph into a platform for mobile advertising. The deal is part of Vodafone's "total communications" strategy in the newly created Internet Services division to offer services beyond the mobile phone.

For more about Vodafone's Internet strategy:
- check out this article from the Financial Times

Alcatel-Lucent's board seeks CEO ouster rules, is Russo's job in jeopardy?

Lynnette Luna — Mon, 19 May 2008 23:54:48 -0400

Alcatel-Lucent shareholders will hold their annual meeting May 30 and will vote on a resolution that would enable the board to remove the CEO by a majority vote rather than the two-thirds vote currently required. Of course, this move leads to speculation that CEO Patricia Russo could be ousted. The vendor hasn't turned a quarterly profit since Alcatel and Lucent formalized their merger in December 2006, and rumors of a Russo ouster continue to circulate from time to time.

For more:
Read this article

Alltel releases some Q1 stats: 385K net new subs

Brian Dolan — Thu, 15 May 2008 11:43:44 -0400

While Alltel recently became a private company, the carrier still decided to release a number of key metrics for its past quarter. The company's revenues totaled $2.3 billion, which is an 11 percent increase over Q1 2007. In addition, Alltel reported a net loss of $125 million. However, those losses were mostly because of costs related to the merger, according to the carrier.

Subscribers: The carrier added 385,000 net new subscribers during the first quarter of 2008. The figure includes 163,000 net postpaid subscribers, 183,000 prepaid subscribers and 39,000 reseller net adds. The all-time high of net new subscribers marks a 63 percent increase over the same period a year ago.

ARPU: Alltel posted average revenue per user (ARPU) of $53.64, up 2 percent from last year. Data ARPU hit $7.50, which is 60 percent higher than last year.

Churn: Alltel posted a post-pay churn of 1.34 percent and total churn of 1.83 percent.

For more:
- check out our metric charts to see the latest net-subs, ARPU, and churn data of the industry's carriers
- read this Alltel Q1 press release

FCC places temporary cap on USF

Fri, 02 May 2008 06:59:54 -0400

The FCC plans to temporarily cap the Universal Service Fund, a growing subsidy program that gave $1.2 billion last year to carriers that provide service in rural parts of the U.S. The commissioners voted 3-2 to limit the payments, and the caps will remain until the regulators figure out a way to reform the program. While the news is a big loss for smaller rural carriers, bigger carriers like Verizon Wireless and AT&T will not have to worry about increasing fees to contribute to the USF. Both AT&T and Alltel agreed to the cap as long as the FCC approved their most recent respective acquisitions: AT&T bought Dobson and Alltel was acquired by PE groups.

For more on the cap:
- read this article from the AP