AT&T Inks $2.35 Bln Deal With Verizon for Rural AllTel Assets

AT&T has announced it's paying $2.35 billion to acquire 79 mainly rural wireless service areas in 18 states that used to belong to Alltel from Verizon Wireless.

Wireless operator AT&T has announced a deal to acquire a large collection of primarily rural wireless licenses and network assets from Verizon Wireless for $2.35 billion in cash. Verizon came by the assets as part of its acquisition of AllTel; to meet regulatory requirements, Verizon has to divest itself of these particular Alltel properties.

The deal covers some 79 service areas, primarily in rural regions, in some 18 U.S. states. The deal will also include some assets from Verizon Wireless itself, as well as the former Rural Cellular Corp. AT&T will also sell some of its Centennial Communications Corp. assets to Verizon Wireless for $240 million.

“Wireless continues to be AT&T’s greatest growth driver, and this transaction will complement our existing network coverage, particularly in rural areas,” said AT&T’s president and CEO of AT&T Mobility and Consumer Markets Ralph de la Vega, 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.”

AT&T said it expects cost of the acquisition and network integration to result in a $0.06 per share dilution in earnings in the first year after closing, and the company expects to put about $400 million into the system in additional capital investments during 2009 and 2010.

The companies expect the deal to close in the fourth quarter of 2009, subject to regulatory approval.