AT&T is bidding for the roughly $3 billion in assets that Verizon Wireless agreed to divest from as a condition in its $28.1 billion acquisition of Alltel, setting the stage for more competition between the two telecom giants and one of the first antitrust issues to arise in the Obama administration.
The telecom company is among a few other bidders for the assets, including a joint bid from private-equity firms Carlyle Group and Kohlberg Kravis & Roberts & Co., as well as a separate bid from Providence Equity Partners, according to a report in The Wall Street Journal. The assets include 2.1 million former Alltel subscribers spread across 22 states, spectrum and other assets.
AT&T Mobility, which lost its rank as the nation's largest wireless carrier in the wake of the Alltel acquisition, could stand to take away the lion's share of the assets, according to people familiar with the matter. The move would be another in a series AT&T has taken following the deal to narrow the gap between the two companies, including AT&T's $944 acquisition of Centennial Communications.
If the assets are purchased it would also be a step toward resolving the issue of subscriber gaps in the divested areas. The divested territories, which are currently being managed by a trust, continue to have service while a buyer is found. However, these customers have not been automatically integrated into Verizon, and if they wish to do so they would have to break their contract with Alltel and become a Verizon subscriber, as if they were coming from another carrier.
The possibility that AT&T could pick up the divested subscribers has also rankled consumer advocates, who argue that such a move would not be in the interest of customers. It also raises the possibility of one of the first antitrust cases the Obama administration would have to face, and may provide a window into how strict a regulatory regime the administration's Justice Department will put in place.
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