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How Alltel Acquisition Helps AT&TBy Jennifer LeClaire
Posted: January 22, 2013 2:20pm PST
AT&T on Tuesday announced an agreement to acquire wireless spectrum and assets from Atlantic Tele-Network. The wireless giant will pay $780 million in an all-cash deal to acquire Atlantic's wireless network and retail operations that operate under the Alltel brand in six states.
Under terms of the agreement, AT&T will acquire wireless properties, including licenses, network assets, retail stores. Alltel also adds about 585,000 subscribers to AT&T's customer base.
AT&T and Alltel are hardly strangers. AT&T bought $2.35 billion in Alltel wireless assets in 2009. That move came in the wake of Verizon's failed acquisition of Alltel and before AT&T's failed acquisition of T-Mobile.
What AT&T Gets
The Alltel U.S. network covers about 4.6 million people in primarily rural areas across six states -- Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina. The acquisition gives AT&T fast access to 700 MHz, 850 MHz and 1900 MHz bands and is largely complementary to AT&T's existing network.
Alltel operates a retail CDMA network for its subscribers in these areas. AT&T said expects that as it upgrades the network, Alltel customers and existing AT&T customers who roam in these areas will see a better mobile Internet experience.
AT&T expects integration costs for network conversion from CDMA will not result in significant dilution to earnings per share or hurt cash flow. The transaction is subject to review by the Federal Communications Commission and the Department of Justice and to other customary closing conditions, and is expected to close in the second half of 2013.
The Alltel buyout is the latest in a string of AT&T spectrum acquisitions. AT&T has also purchased Wireless Communications Service licenses via spectrum purchases from NextWave, SDG&E, Horizon and Comcast in the past year. AT&T can now cover 82 percent of the U.S. population.
AT&T's Alltel Attraction
Rob Enderle, principal analyst at the Enderle Group, told us AT&T's motivation is about acquiring resources, whether that's spectrum, buried fiber or access.
"If you are going to roll out a wired service or increase your coverage with wireless service you need to often buy the rights that are already there. The easiest way to buy the rights is to buy a company that already owns the rights," Enderle said.
Alltel, for its part, has been working to improve its network. The firm recently activated a new digital cell site in Georgia to improve voice and high speed data services in the area. The improvement was part of Alltel's multimillion-dollar investment to enhance its network and systems, continuing its commitment to improving service across the state of Georgia.
"Traditional phone companies are looking for access to homes," Enderle said. "You can use their cable to get access to the homes and then you can use that access to roll out your enhanced services to those homes. It's the same reason that cable companies buy other cable companies, is to get that access."
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