AT&T Buys Some Verizon-Alltel Assets
AT&T's cool coupla billion will net it "1.5 million current subscribers in 79 service areas, primarily in rural areas across 18 states." This will bring AT&T's total wireless subscriber base to around 79.7 million people overall. Verizon Wireless had 86.6 million subscribers at the end of the first quarter. (See AT&T: Another Bumper iPhone Quarter and Wireless Pumps Up Verizon in Q1.)
The states covered are: Alabama, Arizona, California, Colorado, Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Tennessee, Utah, Virginia, and Wyoming.
AT&T intends to spend an additional $400 million on moving its new subscribers from Verizon's CDMA networks to its GSM-based 3G network. It isn't expecting the transition to take more than a year after the deal is closed.
On the financial side, the carrier expects integration costs for network conversion, amortization of intangible assets, and subscriber migration to result in dilution to earnings per share of approximately $0.06 per share in the first year after closing, and that after that, it will improve.
Private equity groups had also been rumored to interested in the Verizon-Alltel assets, as well as AT&T. Verizon didn't comment on any potential deals at the time. (See Verizon Quiet on Alltel Asset Sale.)
A spokeswoman for AT&T says, however, that the sale does not represent all of the properties Verizon Wireless is required to divest. So there is the possibility that more deals may follow. Nobody from Verizon had returned calls about the deal to fully confirm this by press time, however.
AT&T does note that the buyout primarily represents former Alltel assets, but also includes assets from Verizon Wireless and the former Rural Cellular Corporation. The transaction is expected to close in the fourth quarter of 2009.
— Dan Jones, Site Editor, Unstrung