Tuesday, 10 June 2008

Verizon Wireless Acquires Alltell for $28.1bn

Verizon Wireless made headlines Thursday revealing that it will buy out Alltel for a price tag of USD 28.1 billion, boosting its market share and usurping AT&T as the largest mobile phone network in the US...

Verizon Wireless made headlines Thursday revealing that it will buy out Alltel for a price tag of USD 28.1 billion, boosting its market share and usurping AT&T as the largest mobile phone network in the US.

Alltel is currently the fifth-largest wireless operator in the United States with more than 13 million customers located across 34 states.

If the merger is approved, the combined company is estimated to host nearly 80 million customers with Alltel focused mainly in rural areas

According to ABI Research principal analyst Dan Shey, "Unlike the Sprint-Nextel merger where the ease of integration of two networks and associated systems was unknown and proved to be more challenging than predicted, Verizon and Alltel both use CDMA network technologies and have EV-DO networks.

“Customers should not experience any change in service since Verizon and Alltel have roaming relationships, and migration of Alltel customers will only require simple OTA handset updates and billing integration."

Alltel also provides Verizon with additional spectrum assets adding to their spectrum holdings and potentially helping with rollout of broadband LTE networks in a few years.

However, the broader implications are the impact on the competitive environment, Shey notes.

"There is a trend towards growth-by-consolidation and acquisition by many operators in North America and Europe. This development has top line implications but more importantly continue to intensify the competitive environment both regionally and globally," adds Shey.

Regionally, with fewer operators, the combined company's negotiating position with mobile infrastructure suppliers and device vendors would be improved. As well, in Verizon landline footprint areas, Verizon is in a better position relative to cable operators who seek to add mobile to their portfolios when competing for triple and quadruple play services.

Globally, Verizon stakeholder Vodafone has a stronger partner in the United States, providing it with stability as it seeks to expand in emerging markets elsewhere.

Both parties say they are targeting completion of the merger by the end of the year, subject to obtaining regulatory approvals.