Who Will Buy Verizon's Alltel Leftovers?

Verizon Wireless is still required to sell off 26 markets as part of its Alltel acquisition agreement with the government, even after AT&T Inc. (NYSE: T) unveiled a $2.35 billion deal to buy most of those assets on Monday. (See AT&T Buys Some Verizon-Alltel Assets.) "Only 79 of the 105 markets Verizon Wireless is required to divest are included in the agreement with AT&T," a Verizon spokesperson told Unstrung Tuesday. "We are actively working to sell the remaining 26 markets."

With AT&T grabbing the bulk of the markets, however, it is less clear who a potential buyer -- or buyers -- might be. Technology Business Research Inc. (TBR) analyst John Byrne is expecting less carrier interest now that AT&T has put its brand on many of the rural sites.

"There aren't really a whole lot of candidates among the carriers," Byrne tells Unstrung. "T-Mobile USA could be a possibility if the price was right, I guess, but there's been no indication that they are interested."

He adds: "The only other possible candidates would be Leap and MetroPCS, but they are both focused in on mid-size or large market buildouts, so [it's] very doubtful either one of them would be interested in the remaining Verizon markets."

Before the AT&T deal became concrete, some private equity firms were reportedly interested in picking up the rural assets that Verizon had to sell off. Byrne, however, thinks that Verizon will struggle to get a value roughly equivalent to the markets that AT&T wants for the remaining sites, particularly if private equity firms are in on the deal.

"Private equity could still be a possibility, but with the cream of the crop now taken, they would be looking for a much lower valuation on the remaining markets," he says. "So I would not expect anything close to $1 billion if a private equity firm or firms bought the rest of the markets."

In April, Verizon asked the Federal Communications Commission (FCC) to extend its deadline for selling the assets until July 8.

— Dan Jones, Site Editor, Unstrung

ToxicTommy 12/5/2012 | 4:01:42 PM
re: Who Will Buy Verizon's Alltel Leftovers?

These rural areas have already been skipped over by potential, intelligent buyers since big carriers already serve them.  So anybody picking them will be in a losing race with the likes of AT&T.  So unless a buyer can offer bundling opportunitites or low prices through volume (read low margins) for the customer, this customer base will only atrophy over time.  ATN offers neither so now is a god time for shorters on ATN stock.

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