Government // Mobile & Wireless
News
11/19/2008
01:02 PM
Connect Directly
RSS
E-Mail
50%
50%

Verizon-Alltel Merger Nearly Done, U.S. Cellular Next?

The sixth largest cell phone provider has 6.2 million subscribers and uses the same CDMA infrastructure utilized by Verizon and Alltel, making an acquisition relatively easy.

The Federal Communications Commission this week removed the last hurdle in the path of Verizon Wireless' acquisition of Alltel, raising the possibility that U.S. Cellular may become the next juicy acquisition target.

The FCC has marked five more small markets for divestiture, with U.S. Cellular being one of the last standing major wireless providers in the country.

In adding to its earlier approval of the Verizon-Alltel deal, the FCC told Verizon that it will have 120 days after the deal is closed to divest itself of a total of 105 markets. The divestiture list has gradually grown from the 85 markets Verizon originally suggested to the 105-market final figure, but still far short of the 218 markets that originally had been marked for divestiture consideration.

That leaves U.S. Cellular, the sixth largest cell phone service provider, as the last major provider standing. It has 6.2 million subscribers and it uses the same CDMA infrastructure utilized by Verizon and Alltel, making an acquisition relatively easy. When Verizon and Alltel are merged, their combined assets will make the company the largest cell phone provider in the United States. A total of 45% of Verizon Wireless is owned by Vodafone Group, with Verizon Communications owning the remaining 55% stake. AT&T is currently No. 1 in subscribers, and its GSM-based infrastructure would likely make an acquisition of U.S. Cellular too expensive.

While various investment banking analysts and interests have suggested U.S. Cellular would make a sensible acquisition for Verizon, the Carlson Family, which controls U.S. Cellular through its investment in Telephone and Data Systems hasn't shown any interest in selling out.

Fitch Ratings has suggested that U.S. Cellular would be a likely candidate to pick up much of the wireless business that will be up for grabs in the 105 markets earmarked for divestiture.

The new markets slated by the FCC for divestiture are Lyon, Iowa; Muskegon, Manistee, and Newaygo, Mich.; and Johnson, Tenn.

Comment  | 
Print  | 
More Insights
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest - August 20, 2014
CIOs need people who know the ins and outs of cloud software stacks and security, and, most of all, can break through cultural resistance.
Flash Poll
Video
Slideshows
Twitter Feed
InformationWeek Radio
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.