Verizon Wireless Buys Alltel for $28.1 Bln

The big keep getting bigger: U.S. mobile operator Verizon has announced it is buying Alltel in a transaction valued at $28.1 billion.

Verizon Wireless has announced it plans to acquire U.S. regional mobile operator Alltel in a transaction valued at $28.1 billion. In geographic terms, Alltel’s service area is one of the largest in the United States, encompassing areas of 34 states in the southeast, midwest, and northern plains regions of the country, including many rural areas not currently served by Verizon. Although Alltel only handles about 13 million subscribers, the addition of Alltel should be enough for Verizon to wrest AT&T from its perch as the largest mobile operator in the United States.

The deal has an equity value of about $.59 billion, and includes taking over some $22.2 billion in debt. Nonetheless, Verizon says it expects the deal will save the combined company about a $1 billion in the second year over closing, and expects total savings from the deal to total $9 billion. Overall, the deal should see Verizon able to expand its coverage into new areas, and existing Alltel customers will be able to access Verizon Wireless mobile services, including mobile media, music and video downloads, as well as future mobile broadband services.

“This move will create an enhanced platform of network coverage, spectrum, and customer care to better serve the growing needs of both Alltel and Verizon Wireless customers for reliable basic and advanced broadband wireless services,” said Verizon Wireless CEO and president Lowell McAdam, in a statement.

Pending regulatory approval, the companies expect the acquisition to be completed by the end of 2008. Alltel president and CEO Scott Ford will stay on board as head of Alltel until the transaction is completed.

The Verizon Wireless acquisition comes just seven months after Alltel was bought by investment firms TPG Capital and Goldman Sachs’ GS Capital Partners for $27.5 billion.