Verizon looking to buy Alltel, again?

Verizon Wireless is taking another look at buying regional wireless operator Alltel, according to a story published Wednesday afternoon by The Wall Street Journal.

The deal, which could be valued at around $27 billion, is at a sensitive stage and could fall through over the next few days, the newspaper reported.

Alltel was sold only last year for $27.5 billion to the buyout arm of Goldman Sachs and private equity firm TPG Capital. And, according to the Journal, the banks that financed the deal, including Goldman Sachs, Citigroup, Barclays, and Royal Bank of Scotland Group, still owe about $24 billion in loans and bond financing. But the firms see a sale to Verizon as a way to cut their losses on the financing. The article said a person familiar with the deal said the banks would get a nominal return on their investment.

A takeover of Alltel by Verizon Wireless would create the largest cell phone operator in the country with some 80 million subscribers. AT&T, which is currently the nation's largest cell phone provider, reported at the end of last quarter that it has 71.4 million customers. Verizon Wireless, jointly owned by Verizon Communications and U.K.-based Vodafone Group, would gain customers mainly in the Midwest and South where Alltel operates.

A merged company of this size would no doubt be scrutinized by regulators in the Department of Justice and the Federal Communications Commission. And it's likely that Verizon would have to divest some of its assets in markets where the companies overlap.

But that said, Verizon Wireless is the most likely competitor to acquire Alltel. The two companies both use the CDMA (code division multiple access) cellular technology. And they also share a similar technology road map. Earlier this year, Alltel said it would use a next-generation wireless technology called LTE to build its 4G network, the same technology Verizon has said it will use to build its 4G network.

As for any other potential buyers, Sprint Nextel, the other CDMA carrier in the U.S., is in no position to make a big acquisition like this one. The company has seen its subscribers and profits plummet since the failed merger with Nextel in 2005. In fact, some analysts speculate that Sprint Nextel is also on the auction block. The company has already spun off its WiMax division to combine it with Clearwire's network assets. And rumors have floated around that German-based Deutsche Telekom has been eying it, although this seems highly unlikely.

T-Mobile and AT&T are unlikely bidders for the company since they use a different technology called GSM (Global System for Mobile Communications).

Verizon Wireless was among the companies that considered buying Alltel last year when the company first started shopping itself around. And rumors had circulated back in 2005 that Verizon was interested in purchasing the regional cell phone operator. Both times the company didn't make its move.

Verizon Wireless currently has the strongest network in terms of quality and customer base. It's highly profitable and has low levels of turnover, so there's no real reason the company needs Alltel. It seems to be doing just fine on its own. Still, a major move by Verizon could spark even more consolidation in the cellular market.

[Pete Bardo]

I use Alltel and the prospect of it being acquired by Verizon gives me the shivers. Verizon is the most restrictive of all the major providers in terms of what software they will allow to run and which features it disables on cell phones. Glad I don't have a contract, because if this really goes through I'll be looking for a new provider.

[i_am_still_wade]

Alltel is a great cell phone company. Their only flaw is they use CDMA technology. Granted, that is a big flaw. Other than that, they are great. If Verizon buys Alltel, expect Alltel's fair prices to disappear. Verizon has a good network, but they overcharge and they cripple phones to make free features cost money. Alltel doesn't do that.

[nigpoet09]

I have been a happy Alltel customer for many years now. And i really wish Alltel will just stay Alltel, Cause I completly agree with Pete Bardo about Verizon being to strict with its contracts and software. Even though if the take over goes through probably will stick with it cause right now, Alltel is the only wireless service provider that works in my area.

[duerra]

Sweet. This is a great idea! There's too much competition in the marketplace already for cell phone providers. We need to make sure that all these smaller companies get bought out by the big guys until there's only, say, 3 left. I mean, that's what competition is, right? Three choices between huge companies that all seem to conspire to make you pay as much as your wallet can possibly handle? Sweet.

[calculatorwatch]

This would suck, i'm going to Montana for school at and the only two carriers are Verizon and Alltell. I want to have a choice.

[ransom12]

I personally oppose this, I have had Verizon Wireless and they lie and have caps on their data service. The people you talk to on the phone are rude. Alltel has been good carrier for a long time. I really hope that Alltel remains Alltel.

[PaceLattin]

CDMA "cellular" technology. Incorrect, and really sad that a technology writer is using that term. No network is "cellular" anymore, they are all digital.

[duerra]

PaceLattin,
You are in fact the one who is mistaken. A "cell" refers to each one of those towers that your phone connects to in order to connect your call to the rest of the world, thus "cellular" technology. This communication may be digially transmitted, but it doesn't make it any less cellular. =)

[duerra]

PaceLattin,
You are in fact the one who is mistaken. A "cell" refers to each one of those towers that your phone connects to in order to connect your call to the rest of the world, thus "cellular" technology. This communication may be digially transmitted, but it doesn't make it any less cellular. =)

[msrat1]

I will be canceling my Alltel account when this merger is complete and will pay the fees. I do not like verizon and do not want to have anything to do with them; Cell, cable, internet, telephone or any services. They have poor customer service, shady contracts and extraordinary rates and fees.....
I wonder how may people will also leave because of this merger. I hope Alltel listens to their customers and rethinks this from our standpoint. After all, we are the ones who have made them so attractive that Verizon chose them and not T-Mobile or NTELOS to buy.

[DRCBH]

sweet and simple..They merge I will change providers

[Peaches14856]

I have been a satisfied Verizon customer for several years. I just hope that they continue to offer good services and contract prices.

Life is full of changes and sometimes we all just have to adjust to them whether we like it or not.

[benjaminstraight]

It's not gonna happen.

[TOPGameArcade]

I have had alltel since 2006. They have great plains and i really enjoy the My Circle. I have always had service just abotu anywhere i go but Verizon did buy alltel and alltel is going to be verizon so good bye alltel and welcome verizon. My brother has had verizon since about 2006 and the customer service is really good and coverge is better than alltel. So its going to be a good switch i think.

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