Verizon to become largest wireless carrier
Posted
Jun 05 2008, 03:15 PM
by
Kim Peterson
Rating:
Verizon shares are up 5% today after the company said it will buy Alltel for $28 billion, which includes assuming about $22 billion in Alltel debt. Verizon will surprass AT&T to become the largest wireless carrier in the U.S. MocoNews says Alltel is an industry pioneer: with only 13 million subscribers, it tests new services quickly and acts almost like a laboratory for everyone else.
Snatching up an innovative company that isn't afraid to break new ground is important as Verizon competes with an increasing number of rivals across multiple technology fronts. Verizon picks up some assets as well; Alltel serves 57 rural markets that Verizon had no presence in.
The transaction is a bit tricky, since Verizon may have to offload some of Alltel's markets to get regulatory approval. Still, Verizon expects the deal to be cash-flow positive in the first year despite integration costs that could run over $1 billion.
Here's what analysts are saying about the deal:
"You have to see it in context of how Verizon is trying to reinvent itself as a wireless versus a wireline company. The more they do, the faster they do it, the better.” -- Craig Moffett, Sanford C. Bernstein
"This is a way of getting growth from a market that's
becoming fully saturated and beginning to slow down," -- Joseph Bonner, Argus Research
"This deal would help Verizon Wireless grow by acquiring a new customer base. Not that it matters much anymore, because they are all so big, but this deal would give Verizon Wireless the number one spot in the rankings." -- independent analyst Jeff Kagan
"A deal like this would make Verizon somewhat bigger than AT&T. It's looking, more and more, that there's the Big Two and everyone else." -- Julie Ask, Jupitermedia
"Generally speaking, you will continue to see consoldiation among the smaller players. (The wireless industry) is a more limited field than it once was." -- William Power, Robert W. Baird
