AT&T to Buy Alltel Brand from ATNI for $780 Million

AT&T plans to buy Alltel for $780 million in a deal that includes spectrum in three bands and customers in rural areas of the South.

AT&T has been in search of wireless assets to acquire since federal regulators denied its 2011 bid to purchase T-Mobile. On Jan. 22 it announced it has made a deal to purchase the Alltel brand from Atlantic Tele-Network Inc. (ATNI) for $780 million in cash.

The deal includes Alltel's licenses, network assets, retail stores and roughly 585,000 subscribers as well as spectrum in the 700MHz, 850MHz and 1900MHz bands. AT&T officials called the spectrum "largely compatible" with their own.

The Alltel network covers primarily rural areas across Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina, and will enable AT&T to extend its coverage in these states. ATNI operates a CDMA network, and AT&T said that as it upgrades, ATNI customers and roaming AT&T customers "will enjoy an enhanced mobile Internet experience."

AT&T said doesn't expect the integration costs for converting the CDMA network to significantly dilute earnings per share or to impact cash flow.

The Federal Communications Commission and Department of Justice must review the deal, which is subject to customary closing conditions and expected to close in the second half of 2013, AT&T reported.

Regulators are far more likely to green-light the Alltel deal than they were the T-Mobile deal. Critics of the T-Mobile deal, which ranged from senators to consumer interest groups and rival carriers, believed that combining the nation's fourth- and second-largest carriers would create an entity so large that it would crush market competition and ultimately lead to higher prices for consumers.

The T-Mobile deal cost AT&T about $4 billion and a portion of network spectrum. Since stepping away from that deal, AT&T has pursued small deals unlikely to attract the interest of consumer-protection groups or the concern of lawmakers.

In August it announced an agreement to acquire NextWave Wireless, and in December the FCC approved that deal, as well as AT&T's other bids for spectrum in the WCS band. The band, which rubs elbows with satellite-dedicated spectrum, was long thought to be unusable for wireless broadband and Long Term Evolution (LTE) purposes, but AT&T officials have said they figured out a way to make it work, and the FCC apparently agrees.

AT&T is also said to be studying the market in Europe. The Wall Street Journal reported Jan. 17 that AT&T was considering buying a European carrier as a way to "escape constraints on growth at home."

During its third quarter of 2012, AT&T announced wireless revenue growth of 6.6 percent and consolidated revenues of $31.5 billion, but added only 151,000 postpaid customers, one-tenth of the number Verizon Wireless had added during the same quarter.

Verizon announced the results of its 2012 fourth quarter Jan. 22, and they again included strong customer additions—a record-setting 2.2 million new subscribers—though it posted a profit loss of $4.23 billion.

AT&T will share its fourth-quarter 2012 results Jan. 24.

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