Verizon Wireless, ATandT Plan to Swap Wireless Assets
AT&T announced it will acquire wireless assets from Verizon
Wireless for $2.35 billion in cash, in a deal that will ultimately
bring 3G and Wi-Fi networks to rural areas of the United States.
Among the assets trading hands are 1.5 million current Verizon Wireless subscribers in 79 service areas across Alabama, Arizona, California, Colorado, Iowa, Kansas, Michigan, Minnestoa, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Tennessee, Utah, Virginia and Wyoming.
The assets are primarily former Altell holdings, as well as those of Verizon Wireless and the former Rural Cellular Corporation.
AT&T expects the conversion from Verizon's CDMA network to GSM technology for AT&T's network to take no more than a year and result in an additional planned capital investment of approximately $400 million over 2009 and 2010.
"Wireless continues to be AT&T's greatest growth driver, and this transaction will complement our existing network coverage, particularly in rural areas," said Ralph de la Vega, president and CEO of AT&T Mobility and Consumer Markets, in a statement on the deal.
"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."
The deal is contingent on regulatory approval and is expected to close in the fourth quarter of 2009. The success of AT&T's first fiscal quarter - which showed a 13 percent increase in wireless profits, and a nearly 9 percent gain in wireless revenues - is attributed to its offering the Apple iPhone on its 3G service. The carrier also offers Research In Motion's BlackBerry Bold.
In a separate announcement, AT&T additionally said it will be selling wireless assets from Centennial Communications Corp. to Verizon Wireless for $240 million.
The transaction is contingent on the completion of AT&T's acquisition of Centennial, which it began in November 2008, and which AT&T hopes will be advanced by its deal with Verizon Wireless.
Under the terms of the second agreement, Verizon Wireless would acquire Centennial properties such as licenses, network assets and nearly 120,000 subscribers in five service areas in Louisiana and Mississippi.