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2/5/2009
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Verizon Wireless-Alltel Market Shoppers Lining Up

The estimated 2.1 million wireless subscribers in the 100 markets could represent values of as much as $3 billion.

When the U.S. Department of Justice signed off on Verizon Wireless' $28.1 billion acquisition of Alltel last year, its antitrust lawyers may have thought they were done with the deal when they stipulated that 100 markets in 22 states would have to be sold off.

But now with potential buyers for the 100 markets swarming around the assets, the antitrust lawyers -- now working under the Obama administration -- may be drawn into the fray once again. Several potential bidders for the soon-to-be-divested markets are said to be interested in acquiring some of the assets. They include AT&T and, according to a report this week in The Wall Street Journal, also private equity firms the Carlyle Group, Providence Equity Partners, and Kohlberg Kravis Roberts & Co.

The most logical acquirer -- U.S. Cellular -- is also a likely acquirer, because it uses the same CDMA infrastructure used by Verizon Wireless and Alltel. AT&T uses other noncompatible infrastructures, although, like most cell phone service providers, it plans to eventually shift to LTE.

Former FCC chairman William Kennard is a principal in the Carlyle Group, giving it strong expertise in telecommunications affairs. Providence Equity, too, has had deep experience in telecom.

Consumer advocates, who protested the Verizon-Alltel merger as anti-consumer, already are urging that acquisition of the divested markets by smaller players would encourage competition.

The estimated 2.1 million wireless subscribers currently in the 100 markets could represent values of as much as $3 billion, although the markets would likely be eventually sold off in pieces. Verizon Wireless is jointly owned by Verizon Communications and Vodafone Group.

The entire market in North and South Dakota has been designated for divesture, as well as large asset chunks in Colorado, Georgia, Kansas, Montana, South Carolina, Utah, and Wyoming. Smaller pieces have been earmarked in Alabama, Arizona, California, Idaho, Illinois, Iowa, Minnesota, Nebraska, Nevada, New Mexico, North Carolina, Ohio, and Virginia.

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