AT&T said it will pay $2.35 billion in cash to buy the bulk of the Alltel Wireless assets that Verizon Communications must divest as part of its acquisition of Alltel, the company announced Friday.
As part of the deal, AT&T will get wireless spectrum licenses, network assets, and 1.5 million subscribers in 79 service areas.
Verizon Wireless was required to sell assets in parts of 18 different states as a condition for getting regulatory approval to buy Alltel. The Verizon-Alltel deal, valued at $28.1 billion, was announced in June 2008, and closed in January this year. After the merger, Verizon Wireless became the largest U.S. wireless operator, surpassing AT&T in terms of subscribers.
So what does this mean for former Alltel wireless customers? Well, for customers in parts of Alabama, Arizona, California, Colorado, Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Tennessee, Utah, Virginia, and Wyoming, it means that they will become AT&T wireless customers.
The asset acquisition also included a few markets from Verizon Wireless and the former Rural Cellular, AT&T said in its statement. The old Rural Cellular, or Unicel as it was also called, had operations in parts of Maine, New Hampshire, Massachusetts, Alabama, Mississippi, Minnesota, North Dakota, South Dakota, Wisconsin, Idaho, Washington, and Oregon.
AT&T said in its statement that after the network and billing integration is complete, the new AT&T customers will have access to all the same phones and service plans available to all its AT&T customers, including free Wi-Fi for 3G LaptopConnect customers and qualified smartphone subscribers. And for interested rural wireless customers, it will be the first chance to get their hands on the popular iPhone, which is exclusively sold in the U.S. to operate on AT&T's network. These customers will also get access to other AT&T exclusive devices, such as the BlackBerry Bold.
AT&T's executives said that acquiring these assets helps fill a hole in its offering to rural subscribers.
"This transaction will complement our existing network coverage, particularly in rural areas," Ralph de la Vega, president and CEO of AT&T Mobility and Consumer Markets, said in a statement. "The acquisition will add network assets, distribution channels and 850 MHz spectrum in a significant portion of the U.S., enabling even better coverage for AT&T's subscribers in those areas."
Also, as part of the deal, AT&T is selling Verizon its former Centennial Wireless properties. This deal, worth $240 million, includes licenses, network assets and nearly 120,000 current subscribers, in five service areas in Louisiana and Mississippi.
The deal is expected to close in the fourth quarter of 2009, contingent on regulatory approval, AT&T said.