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Verizon Wireless To Acquire Alltel, Become Largest Carrier In U.S.

6/05/2008 11:02:00 AM Eastern

Basking Ridge, N.J. — Wireless carriers Verizon Wireless and Alltel reached a merger agreement under which Verizon will buy Alltel for $5.9 billion and assume the rural carrier’s $22.2 billion debt.

The acquisition, targeted for completion by year’s end, will make the combined entity the largest wireless carrier in the United States with a combined 80.2 million subscribers, besting AT&T Wireless’s more than 71 million subscribers.

The announcement follows last November’s conversion of Alltel to a privately held company.

The acquisition will expand Verizon’s footprint into 57 primarily rural markets served by Alltel, cut about $1 billion in operating expenses in the first two years– including roaming fees paid to Alltel. Also, the combined companies would reduce the amount of future capital expenditures by about $9 billion compared to what they would have spent if they remained separate entities, a Verizon spokesman said. Those costs include the costs to Verizon of building its own network in Alltel markets, the spokesman said.

Expanding into rural areas is “one of the compelling reasons [for the acquisition], but don't forget that we use the same technology, we both focus on retail post-pay customers and we save on the roaming,” a Verizon spokesman told TWICE.

Both companies’ networks use CDMA 1x technology and handsets equipped with BREW technology, which enables over-the-air downloads of games and other applications. Alltel serves more than 13 million customers in markets in 34 states. Verizon Wireless currently serves 67.2 million subscribers.

Once the merger is complete, subscribers of both networks will be able to access new services and more products, including an expanded in-network calling community. Alltel customers will be able to download songs over the air from Verizon’s three-million-song library. Alltel customers will eventually be able to take advantage of Verizon’s Open Development initiative, which will allow third-party devices to use the Verizon network. And Alltel subscribers will eventually be able to use the high data speeds promised by LTE technology that Verizon plans to deploy in the future.

Verizon Wireless entered into an agreement with Alltel Corporation and Atlantis Holdings to acquire Alltel in the cash merger.