NEW YORK (AFP) - Verizon Wireless announced plans Thursday to buy mobile carrier Alltel in a deal worth 28.1 billion dollars including debt, to leapfrog AT&T and become the biggest US wireless group.
Verizon Wireless, a joint venture of US telecommunications giant Verizon Communications and Britains Vodafone, struck the deal with the private equity group that agreed to buy Alltel a year ago for 27.5 billion dollars.
The acquisition, which would be one of the biggest corporate deals of the year, comes amid speculation that the world telecom market could be heading for another wave of consolidation.
It came as France Telecom offered 33 billion euros (51 billion dollars) for Swedish-Finnish operator TeliaSonera in a bid to create the worlds fourth-biggest mobile operator. The offer was rejected by TeliaSonera.
Under the terms of the agreement in the US, Verizon Wireless will acquire the equity of Alltel for 5.9 billion dollars cash and assume the companys debt of 22.2 billion dollars.
The deal would give Verizon Wireless, the second-biggest mobile phone company in the United States with 67 million customers, control over the fifth largest, Alltel with 13 million.
The combined group would have more American mobile phone customers than AT&T which has 71.4 million.
The two firms hope to complete the deal by the end of the year, subject to regulatory approval.
"This is a perfect fit, with Alltels high-value post-paid customer base, its solid financials, our common network technology, and significant, readily attainable synergies," said Ivan Seidenberg, Verizon Communications chief executive and chairman. "Verizon Wirelesss acquisition of Alltel clearly provides opportunities for enhanced value for Verizon shareholders."
The merger will accelerate deployment of the so-called fourth generation of wireless services, which include voice, data and video over mobile devices, the companies said.
Verizon Wireless expects to realize synergies or cost savings of some nine billion dollars after acquisition costs.
The two firms use a common network technology, CDMA (code division multiple access), "which provides advantages of a seamless transition for Alltel customers, ease in integrating the two companies networks, and scale efficiencies in operating the larger integrated network," according to a joint statement.
The sale of Alltel was announced in May 2007 and completed in November 2007 by Atlantis Holdings, led by investment fund groups Goldman Sachs Capital Partners and TPG Capital, for 27.5 billion dollars.
Analysts at Briefing.com said the tie-up "will give Verizon increased visibility in rural markets since Alltel serves more than 13 million customers in 34 states, including 57 primarily rural markets."
Verizon shares lifted 5.35 percent to end the day at 38.96 dollars on the news. Alltel shares are not publicly traded.
"Verizon Wireless and Alltel fit well together. The two have partnered for years to provide nationwide coverage to their respective customer bases," said Morningstar analyst Michael Hodel.
Hodel said the quick sale by the equity group highlighted troubles in financial markets.
"Alltel is now operating under a massive debt load ... and banks holding the debt have had trouble selling it in the current credit environment," he said.
Earlier, amid reports of a possible tie-up, an analyst at brokerage Daniel Stewart, Mike Jeremy, said the Alltel acquisition "may disappoint those who had hoped Vodafone would sell its stake in Verizon Wireless and return its value as a special dividend."
He said it also pointed to "a possible offer at some stage to Verizon Wireless for a controlling interest."
Vodafone owns a 45 percent stake in Verizon Wireless.
Verizon Wireless, a joint venture of US telecommunications giant Verizon Communications and Britains Vodafone, struck the deal with the private equity group that agreed to buy Alltel a year ago for 27.5 billion dollars.
The acquisition, which would be one of the biggest corporate deals of the year, comes amid speculation that the world telecom market could be heading for another wave of consolidation.
It came as France Telecom offered 33 billion euros (51 billion dollars) for Swedish-Finnish operator TeliaSonera in a bid to create the worlds fourth-biggest mobile operator. The offer was rejected by TeliaSonera.
Under the terms of the agreement in the US, Verizon Wireless will acquire the equity of Alltel for 5.9 billion dollars cash and assume the companys debt of 22.2 billion dollars.
The deal would give Verizon Wireless, the second-biggest mobile phone company in the United States with 67 million customers, control over the fifth largest, Alltel with 13 million.
The combined group would have more American mobile phone customers than AT&T which has 71.4 million.
The two firms hope to complete the deal by the end of the year, subject to regulatory approval.
"This is a perfect fit, with Alltels high-value post-paid customer base, its solid financials, our common network technology, and significant, readily attainable synergies," said Ivan Seidenberg, Verizon Communications chief executive and chairman. "Verizon Wirelesss acquisition of Alltel clearly provides opportunities for enhanced value for Verizon shareholders."
The merger will accelerate deployment of the so-called fourth generation of wireless services, which include voice, data and video over mobile devices, the companies said.
Verizon Wireless expects to realize synergies or cost savings of some nine billion dollars after acquisition costs.
The two firms use a common network technology, CDMA (code division multiple access), "which provides advantages of a seamless transition for Alltel customers, ease in integrating the two companies networks, and scale efficiencies in operating the larger integrated network," according to a joint statement.
The sale of Alltel was announced in May 2007 and completed in November 2007 by Atlantis Holdings, led by investment fund groups Goldman Sachs Capital Partners and TPG Capital, for 27.5 billion dollars.
Analysts at Briefing.com said the tie-up "will give Verizon increased visibility in rural markets since Alltel serves more than 13 million customers in 34 states, including 57 primarily rural markets."
Verizon shares lifted 5.35 percent to end the day at 38.96 dollars on the news. Alltel shares are not publicly traded.
"Verizon Wireless and Alltel fit well together. The two have partnered for years to provide nationwide coverage to their respective customer bases," said Morningstar analyst Michael Hodel.
Hodel said the quick sale by the equity group highlighted troubles in financial markets.
"Alltel is now operating under a massive debt load ... and banks holding the debt have had trouble selling it in the current credit environment," he said.
Earlier, amid reports of a possible tie-up, an analyst at brokerage Daniel Stewart, Mike Jeremy, said the Alltel acquisition "may disappoint those who had hoped Vodafone would sell its stake in Verizon Wireless and return its value as a special dividend."
He said it also pointed to "a possible offer at some stage to Verizon Wireless for a controlling interest."
Vodafone owns a 45 percent stake in Verizon Wireless.
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