Alltel, The 'Little' Cell Phone Company, Is Bought For $27.5 Billion
The new owners have made it clear that they intend to invest in the wireless industry in a big way.
Little Alltel doesn't look so little anymore after two buyout companies moved to purchase the mobile phone service provider for $27.5 billion on Sunday.
The fifth-largest cell phone company, Alltel has the nation's largest U.S. geographical footprint, and the new owners are expected to take advantage of it.
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"They have made it abundantly clear they are prepared to invest in a big way in the wireless business," Alltel CEO Scott Ford told the Wall Street Journal, referring to the purchasers, Goldman Sachs Group and TPG (Texas Pacific Group) Capital.
The purchase had been predicted. The buyout firms agreed to pay $71.50 a share for Alltel.
The buyout, which still requires shareholder approval, takes place as the FCC prepares to auction wide swathes of 700 MHz spectrum, which could increase Alltel's coverage if it obtains a significant piece of the bandwidth.
Infrastructure will take on a more important role for Alltel in the future. Its CDMA infrastructure is the same as that of Verizon Wireless, and both firms have consistently ranked high in consumer satisfaction surveys. Their CDMA2000 EV-DO Rev. A is the fastest in the U.S. market at present. According to published reports, Verizon considered acquiring Alltel, but dropped out of the bidding.
The remaining major service providers -- all of whom have more subscribers than Alltel -- are also looking to the future. AT&T's former Cingular unit is betting heavily on Apple's iPhone launch next month, Sprint is rolling out both 3G and wide area WiMax, and T-Mobile is deploying $4 billion of recently-acquired spectrum.
After the Alltel purchase is completed -- probably around the end of the year -- the company plans to keep its headquarters in Little Rock, Ark. Alltel has about 15,000 employees.
Alltel's 12 million subscribers are primarily scattered throughout the Midwest, the South, and the West. "What impact should this [buyout] have on customers," Telecom industry analyst Jeff Kagan asked rhetorically. "I don't see much if any impact. Alltel seems to be a well run company with happy customers, so tweaking rather than wholesale changes should be expected."
In a statement, Alltel's Ford said, "This transaction delivers substantial and certain value to our shareholders while providing the company with long-term partners who share our commitment to our customers, employees, and communities we serve."