Verizon Wireless to fork out $28.1B to buy Alltel
Verizon Wireless will move to the head of the class as the nation’s largest mobile phone company after today’s announcement that it is purchasing Alltel for $28.1 billion.
Verizon will pay about $5.9 billion in cash and $22.2 billion in debt to buy Alltel. The two companies expect the deal to close by the end of the year once it passes regulatory muster.
Once the purchase is complete, customers from both companies will have access to an expanded range of products and services. Alltel customers will also gain access to Verizon Wireless’ advanced services, including over-the-air downloadable music from a three-million-song library, and a network that is nationwide for coast-to-coast coverage.
“This move will create an enhanced platform of network coverage, spectrum and customer care to better serve the growing needs of both Alltel and Verizon Wireless customers for reliable basic and advanced broadband wireless services," said Lowell McAdam, Verizon Wireless’ president and CEO.
Alltel serves more than 13 million customers in markets in 34 states, which include 57 primarily rural markets that Verizon Wireless currently does not serve. Alltel provided service to both AT&T and Verizon in rural areas where they did not have coverage.
Verizon Wireless, which is 55 percent owned by Verizon Communications and 45 percent owned by Vodafone Group, said synergies from the deal were expected to drive incremental cost savings of $1 billion in the second year after the closing.
The transaction puts the Alltel markets and customers on a path to advanced fourth-generation services as Verizon Wireless deploys LTE technology throughout its network in the next several years. Alltel's customers will also reap the benefits of Verizon Wireless' Open Development initiative, which welcomes third-party devices and services to use the Verizon Wireless network.
Alltel President and CEO Scott Ford will continue in his current position as head of Alltel until the merger is completed.
With the Alltel purchase, Verizon Wireless would have roughly 80.2 million wireless users to AT&T’s estimated 71.4 million. AT&T added to its wireless subscriber numbers with the pickup of Cingular when it bought BellSouth two years ago.
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