Verizon Reportedly In Talks To Buy Alltel For $27 Billion

The potential deal would make Verizon Wireless the largest carrier in the United States with potentially 78.9 million subscribers.

Marin Perez, Contributor

June 4, 2008

1 Min Read

Verizon Wireless is in talks to purchase Alltel Communications for about $27 billion, according to reports from CNBC and The Wall Street Journal.

The Journal said negotiations are at a sensitive stage and could fall through in the next few days. Both reports cited unnamed sources close to the deal. Representatives from Verizon and Alltel declined to comment.

Private equity firms Goldman Sachs' and TPG Capital, which took Alltel private about six months ago, would end up with a nominal return on their investment, the Journal also said in its report.

Currently, Verizon has more than 65.7 million subscribers. By adding Alltel's 13.2 million subscribers, Verizon would become the largest cell phone operator in the United States. AT&T, currently the largest wireless carrier, has 71.4 million customers according to its last quarterly report.

Alltel is currently the nation's fifth-largest carrier by subscriber, but it has the largest geographical reach of any carrier. Alltel has a wide-ranging network that covers parts of 35 states, mostly in the Midwest and South. This additional coverage could be a major asset for Verizon as it would allow the company to greatly save on roaming charges. Additionally, both companies utilize CDMA technology for their wireless networks, which should make transitioning networks over relatively painless.

Verizon reportedly considered buying Alltel when the company began shopping itself around 11 months ago. Alltel was eventually taken private in a $27.5 billion deal.

In the first quarter, Alltel gained 384,941 net subscribers, but it posted a loss of $124.9 million. The company blamed the losses on higher expenses related to the buyout.

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