AT&T 'extremely disappointed' with FCC's delay in Alltel purchase review

The FCC has stopped its review of AT&T Mobility's (NYSE:T) proposed $780 million purchase of Atlantic Tele-Network's retail wireless business, which still operates under the Alltel brand, arguing that AT&T has not provided enough information about how it will transition Alltel's remaining prepaid customers to its network.

The FCC halted its informal 180-day "shot clock" for reviewing deals on day 175 of the review period. In a letter to AT&T, Ruth Milkman, the FCC's wireless bureau chief, wrote that the FCC in June had requested information from AT&T regarding it plans to migrate Alltel customers. AT&T responded with information about moving postpaid customers to its network. However, Milkman wrote that so far, despite several FCC follow-ups "about the importance of transitioning prepaid customers, we have received no detailed responses from AT&T on its plans for transitioning ATN's significant prepaid customer base."

As of the end of the second quarter, ATN counted around 591,000 U.S. retail wireless customers, of which around 409,000 were postpaid subscribers and 182,000 were prepaid. Milkman wrote that the FCC will restart its shot-clock on the deal when AT&T provides the information it requested. ATN operates the Alltel brand through a subsidiary called Allied Wireless.

"AT&T is extremely disappointed at the FCC delay today on this small transaction," Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs, said in a statement. "AT&T is ready, willing and able to make significant network investments in these rural territories to bring HSPA+ and LTE services to Allied's customers, an investment that will not occur but for this transaction. AT&T has actively worked to address FCC concerns and will continue to work with the commission until all issues are resolved."

Under the deal, which was announced in January, AT&T would get wireless properties including licenses, network assets, retail stores and the Alltel subscribers. Specifically, AT&T will get spectrum in the 700 MHz, 850 MHz and 1900 MHz bands, which is largely complementary to AT&T's existing network. However, ATN's network uses CDMA technology so AT&T will need to covert the customers to its GSM network.

The Alltel network covers around 4.6 million people in primarily rural areas across Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina. In 2010, ATN purchased for $200 million Alltel assets divested by Verizon Wireless (NYSE:VZ) as part of Verizon's larger deal for Alltel.

The delay in the review comes as the FCC begins considering AT&T's proposed acquisition of no-contract wireless carrier Leap Wireless (NASDAQ:LEAP). AT&T said in July it expects that deal to close within six to nine months. After the transaction closes, AT&T has said it expects to keep Leap's Cricket brand and distribution.

For more:
- see this FCC document (PDF)
- see this PhoneScoop article
- see this The Verge article

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