Money Matters, Simplified.
AT&T to acquire some Alltel assets from Verizon
New York, May 10: U.S. telecommunications giant AT&T (NYSE: T) confirmed that it is acquiring some assets of arc rival Verizon Wireless (NYSE: VZ) as part of the regulatory approvals granted to the latter for its purchase of Alltel Wireless.
AT&T, Verizon deal
As a part of the deal between the top two telecommunication companies in the United States, AT&T is to buy the assets of Verizon Wireless, primarily in 79 rural areas.
AT&T will get spectrum licenses, cell towers and 1.5 million subscribers in the arrangement.
AT&T will then be required to convert these connections to GSM service as its own phones are not compatible with Alltel or Verizon phones. The task entails a capital investment of $400 million and is likely to be completed in a span of the two years. Thereafter, the wireless telephone subscribers will be able to access AT&T's 3G broadband network as well.
The eighteen states where AT&T would have to complete this exercise are Alabama, Arizona, California, Colorado, Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Tennessee, Utah, Virginia and Wyoming.
In a separate transaction, Verizon has settled to purchase a small number of service areas from AT&T for $240 million. AT&T is required to get rid of these assets, as a part of regulatory strictures, after it purchased Centennial Communications in November 2008.
Verizon, Alltel deal
Verizon had acquired Alltel in June 2008 in a deal valued at $28.1 billion. Prior to this acquisition, Little Rock, Arkansas based Alltel Corporation was the fifth largest wireless telecommunications company in the United States. As of the fourth quarter 2008, its customer base stood at 4.7 million customers.
The complete integration of the Alltel markets into Verizon Wireless is likely to be completed by the third quarter of 2009. Verizon intends to save about $1 billion this year as a part of its integration process with Alltel.