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Verizon Jumps Past AT&T as the Nation’s Largest Wireless Carrier with its Acquisition of Alltel
The just announced deal for the Verizon acquisition of Alltel for $28.1 billion will leverage Verizon into an 80 million plus subscriber carrier.
The New York Times is confirming earlier reports by the Wall Street Journal that Verizon has successfully agreed to buy Alltel for $28.1 billion. This move once completed will catapult Verizon past AT&T (which has about 74 million subscribers) and into first place amongst US cellular carriers.
Interestingly this purchase comes on the heels of last year's buyout of the company by Goldman Sachs and other private equity investors. Reportedly, the investors had been unable to sell all of the debt which reflected in their books as a loss---thus prompting a desire to get out of the deal.
Alltel's chief executive Scott Ford and Lowell McAdam the CEO of Verizon have reportedly flirted with a merger for years, but previous attempts have been torpedoed by Verizon's investor Vodafone, which did not want its share diluted. This deal is a pure debt finance and avoids that issue.
The two companies both operate CDMA networks which should simplify the technical integration of the two companies. The deal will significantly strengthen Verizon's position in Midwestern and Southern markets.
This deal coming on rumors of a potential acquisition of Sprint by T-Mobile and others spurs speculation that the industry may be about to enter another round of consolidation to Mega-carrier sizes. Will smaller players struggle in this marketplace?
Tim Sanders
The Final Mile
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