RSSVerizon Wireless, Alltel sign $28.1 billion deal
By Ed Oswald | Published June 5, 2008, 11:15 AM
Confirming market speculation, the two companies released a joint statement Thursday that said Verizon would acquire the equity of Alltel as well as assume its debt.
Verizon Wireless is jointly owned by US telco Verizon and European telco Vodafone, which yesterday was the first to confirm that talks between VZW and Alltel were taking place.
The equity stake of Alltel is valued at some $5.9 billion, while it carries about $22.2 billion in debt. If the deal is approved, it is expected to close by the end of the year. Verizon Wireless would become the largest carrier -- with the nation's fifth largest carrier in tow -- with an estimated combined total of some 80 million plus customers.
Alltel serves about 13 million customers in 34 states. In addition, it has holdings in 57 rural markets where Verizon currently does not serve. Since both companies were working towards LTE for fourth generation services, the deal seems like a natural fit.
"This move will create an enhanced platform of network coverage, spectrum and customer care to better serve the growing needs of both Alltel and Verizon Wireless customers for reliable basic and advanced broadband wireless services," Verizon Wireless president and CEO Lowell McAdam said in a statement issued this morning.
VZW expects to see an immediate return on its large investment, saying Alltel's financials and solid customer base will provide "opportunities for enhanced value" for Verizon shareholders. Savings of $1 billion annually are expected as a result of the combined operation.
Wall Street reaction to the merger was almost immediately positive. As of midday, shares of Verizon Communications shot up nearly five percent to $38.79. Alltel is not publicly traded. Shares of VZW co-owner Vodafone soared this afternoon by nearly four percent on the London Stock Exchange, since 2:30 pm local time.
I'm more shocked that Verizon bought them because i didn't even hear that Alltel had debt 4.5 times it's worth. But the deal makes sense in all regards. Now Verizon will have the coverage areas Alltels got over them, like NM, and since the networks are the same conversion should be very easy.
I'm hoping though they'll keep the awesome customer service that Alltel has, plus their benefits like not renewing contracts when changing plans, and My Circle (practically a unlimited plan for half the price!)
Not like Sprint's disatrous merge with Nextel, leading both comapnies to die a slow death...
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Guess we won't be seeing anymore of those silly commercials where all the rival carriers are jealous nerds of the cool guy Alltel. The commercials were pretty good marketing though you have to admit.
Guess the next carrier on the auction block is sprint/nextel. I am guessing At&t will get them, its only natural after what we seen with the telco companies.
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a GSM carrier purchase a CDMA carrier? ... just doesn't seem likely to me.
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The marketing may have been good from your persepctive. No problem with that at all. I tend to shy away from companies that will try to insult the competition rather than just go out and say what they have. It's a line Apple has trouble crossing in their advertisements, too.
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Nor did Sprint (CDMA) buying Nextel (iden) seem logical. But it happened :)
I agree though, it's incredibly unlikely...
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They are both largely CDMA equipment right now. I know Verizon was planning on moving to LTE. It sounds like Alltel was going that route as well.
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Both Verizon (in the US) and Alltel are CDMA.
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Nextel's iDen was only for its walkie talkie feature, otherwise it was TDMA for the cell phone calls itself. Now Sprint is starting to switch it to CDMA and some of their world phones can also use GSM.
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I'm more thinking that if they keep the companies seperate they'll still have those commercials minus the Verizon guy and the Alltel guy will be wearing both an Alltel and Verizon tag on him. If they make it one company then they may just have a Verizon guy. It depends on how well the advertising campagne worked.
Sprint/Nextel I hear that T-Mobile is eyeing them, but I like the idea of AT&T better. Having CDMA/GSM phones just seems really nice. I'm with Sprint and their are areas I don't get good coverage but my friend who has AT&T gets good coverage and vica versa. A CDMA/GSM phone company would be the ultimate venture and Sprint already has world phones that use GSM so the idea of a hybrid phone is their.
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The Nextel purchase was considered a bad decision by almost everyone and it directly contributed to Sprint's decline. Trying to gain market share by absorbing an incompatible technology rarely goes well. AT&T has reason to worry about a bigger Verizion with better coverage - up till now they've only had Alltel with its inferior pricing and service to compete with in rural areas.
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