Verizon in Talks to Buy Alltel for $27 Billion

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RichardDeaf

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Crap! I hope VZ will not success in buying ALLTEL out.

Verizon is deep in talks to acquire Alltel, the nation's fifth largest wireless carrier, for roughly $27 billion, people close to the talks have told CNBC.

Alltel was only recently taken private by TPG and Goldman Sachs Capital Partners in a $27.5 billion deal. That deal, announced in May of last year, closed in November.

Verizon seems likely to pay no more than did TPG and Goldman, and will be doing so for a company that has increased its earnings before interest, taxes, depreciation and amortization (Ebitda) by 10 percent since the leveraged buyout was announced last may.

Verizon is expected to pay roughly 8 times Alltel's current Ebitda, in contrast to the 9.2 times Ebitda that TPG and Goldman paid last year when they put in roughly $4.6 billion of equity and lined up $23.8 billion of debt financing to get the deal done.

Officials at Verizon and Alltel declined all comment.

Verizon has long been looked at as the ultimate purchaser of Alltel, but failed to bid when the company was auctioned in the spring of 2007. According to people involved in that auction, Verizon believed Alltel's valuation was too high.

Of course, that was a far different time in the credit markets, when financial buyers were routinely outbidding strategic buyers despite the cost savings and revenue synergies available to the strategic buyers.

One year later, Verizon stands ready to take advantage of those cost advantages with this expected purchase.

Alltel's network is contiguous with Verizon's own and will allow the carrier to save the roaming charges it pays Alltel.

The addition of the network to Verizon is also expected to bring significant cost advantages in other areas.

Sources told CNBC that the sponsors are willing to sell only six months after they closed the deal because they'll get a slight premium to their equity investment, and there is a broad desire within private equity these days to generate a return when one is available.

While the premium for the equity may be slight, given the enormous leverage in the deal, the returns would seem to be good ones for TPG and Goldman.

Verizon's wireless unit is a dominant carrier in the United States and contributes the vast bulk of the company's cash flow.
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Alltel Takeover: Verizon in Talks to Buy Alltel for $27 Billion - Telecom Mobile * Technology * News * Story - MSNBC.com
 
ouch ! i hope it wont happen because u have a job ! i hate seeing ppl are getting laid off this year.
 
Done deal: Verizon will buy Alltel for $28B - USATODAY.com

NEW YORK — Verizon Communications (VZ) said Thursday that its Verizon Wireless unit has sealed the deal to buy Alltel, the USA's No. 5 wireless carrier, for about $28 billion.
The agreement calls for a cash payment of $5.9 billion and Verizon Wireless to assume $22.2 billion in debt, Verizon says. The deal is expected to close by the end of the year, pending regulatory approvals.

The deal gives Verizon Wireless more than 80 million customers, easily eclipsing AT&T to take the No. 1 spot.


WHAT VERIZON SAYS: Read the company's press release.

AT&T has around 71 million subscribers. No. 2 Verizon has 67 million now; Alltel has 13 million, many of them in small, rural markets.

FIND MORE STORIES IN: Internet | Little Rock | Verizon Wireless | WiMAX | TPG Capital | Apple iPhone | Craig McCaw | Clearwire
Founded in Little Rock in 1943, Alltel today is a $9 billion wireless company with customers in 34 states. Its customer service is considered top-notch, putting it on par with Verizon Wireless, which also ranks high consistently for its customer service.

The two companies also share a common technology: CDMA. AT&T's wireless services are built around the more common GSM standard that is used by 85% of the global wireless users.

A Verizon-Alltel merger would have little impact on consumers, says Jane Zweig, CEO of The Shosteck Group, which tracks the wireless market.

"It's just going to make Verizon a little bigger," she says. Still, such a deal would give Verizon a bigger presence in smaller markets across the USA.

Alltel "has a very good network," Zweig says, enabling it to offer an array of advanced-technology wireless services, including mobile Web access.

Chasing the mobile Web has become a blood sport among the big carriers. As Web-enabled devices such as AT&T's Apple iPhone continue to grow in popularity, so, too, does pressure from consumers for better and faster Web access.

Verizon recently agreed to pay almost $10 billion to acquire a coveted cache of 700-megahertz wireless licenses, formerly owned by TV operators, that can enable superfast mobile data services. AT&T paid more than $6 billion.

Sprint, the No. 3 wireless carrier, has teamed with Clearwire and wireless visionary Craig McCaw to build an advanced wireless data network across the USA. The network is based on WiMax technology, a direct competitor of the next-generation wireless technology favored by Verizon.

Alltel, a merger machine for more than a dozen years, was acquired in November by TPG Capital and GS Capital Partners of Goldman Sachs for $27.5 billion. The purchase price represented a 23% premium over Alltel's then-trading price of $71.50 a share.

Alltel, no longer traded publicly, is a well-run company with a reputation for innovation, Zweig says. "It's one of those sleepers that people never paid much attention to." Now they presumably will, she says.
 
I got this email from Scott Ford (Alltel CEO):

Last night, we signed an agreement to merge Alltel into Verizon Wireless. This merger will create the best wireless company in the country with around ­­80 million customers and over $56 billion in revenue. This combination is the best way -- long-term -- to provide not only for our customers but for the majority of our employees as well.

There will be no immediate impact on your job. You will have the same job tomorrow that you had yesterday, reporting to the same individual, working for the same pay and eligible for the same bonuses or commissions.

The merger is expected to close around year-end and we must continue to operate our business independently of Verizon until the closing. We must provide the same great value and service that our customers have come to expect from us and deliver outstanding financial results along the way. We will continue to compete in the market as if nothing were going to change. Over 13 million customers are depending on us.

This kind of change is always difficult – but it is also manageable. It is not a time for panic, it is a time to seek accurate information and make informed decisions. We are committed to getting you the timely information you need to plan.

We are holding a series of meetings with management teams today and your manager will share much more with you very quickly.

Visit Alltel Today for more information.
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Dept of Justice and FCC will have to approve this merge first. I have some feeling that FCC will have add some strings to this deal.. As far as I am aware, no carrier can have both band A and B in same market. In the past, they trade it to other carrier to ensure no conflicts.. Unless FCC do the waviers in allowing VZ to carries both A and B bands in same market, that would definely will impact my job. Again FCC has been pretty much toothless lately.
 
I believe Verizon would first need to get its approval from its parent company (Vodafone).
 
Brian said:
I believe Verizon would first need to get its approval from its parent company (Vodafone).
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VZ/ALLTEL signed contracts last night.. Just government part need to be involved to ensure no "monopoly". I just found out that A/B bands restriction is no longer due to other carriers (PCS) like ATT, Sprint, etc are in same market as VZ/ALLTEL. Rural area may be an issue where there are no other carriers in these area.
 
I see, RichardDeaf. This certainly won't be a good news for Little Rock where AllTell is based. Wonder if Verizon plans to adopt AllTel's special plans for the deaf/hoh?
 
RichardDeaf said:
VZ/ALLTEL signed contracts last night.. Just government part need to be involved to ensure no "monopoly". I just found out that A/B bands restriction is no longer due to other carriers (PCS) like ATT, Sprint, etc are in same market as VZ/ALLTEL. Rural area may be an issue where there are no other carriers in these area.
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I wonder there is no limits for data plan anymore.
 
deafclimber said:
check this - verizon's plans for deaf subscribers....


Verizon Wireless Introduces Nationwide Messaging Plans
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PDA/Smartphone
Monthly Access: $54.99 (Includes unlimited text, IM, picture and video messaging, plus E-mail, Web browsing and data usage)
Per-minute Voice Rate: $0.25

“We developed these messaging plans in response to feedback from our customers,” said Robert Miller, vice president - marketing for Verizon Wireless. “We have a growing number of customers, particularly from the deaf or hard of hearing community, who are using their wireless phones to communicate via messaging. Our Nationwide Messaging plans offer an affordable solution for customers who primarily use messaging to communicate, giving them more choices to only pay for services they need.”

All three Nationwide Messaging plans allow customers to send and receive international text messages for $0.25 per message. Nationwide Messaging plans are available with a one- or two-year customer agreement (activation fees, taxes, and other charges apply).

interesting.
 
It seems better deal than tmobile want buy Sprint.

I never recommended tmobile to buy Sprint, too risky.

Richard, I'm glad that you wouldn't lose the job.
 
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