AT&T picking up former Alltel markets from Verizon for $2.35 billion

Yesterday AT&T announced that it has reached an agreement with Verizon Wireless that will see AT&T acquiring a large number of former Alltel Wireless assets and 1.5 million subscribers from Verizon for US$2.35 billion in cash. Verizon Wireless was required to divest of most of these particular markets in order to get federal approval for its acquisition of Alltel. The government required Verizon to release these Alltel markets in order to maintain competition.

The areas being picked up by AT&T are primarily rural markets in the following states: Alabama, Arizona, California, Colorado, Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Tennessee, Utah, Virginia, and Wyoming.

AT&T Mobility's CEO, Ralph del la Vega, said the following regarding the deal:

"The acquisition will add network assets, distribution channels, and 850 MHz spectrum in a significant portion of the U.S., enabling even better coverage for AT&T's subscribers in those areas."

AT&T has said that it will take no more than one year to convert the CDMA network markets it is purchasing over to its own GSM and UMTS based system. It made no mention of how it would incent its newly acquired subscribers to covert to the new handsets they will need to use the AT&T network, however.

AT&T expects the transaction to close before the end of 2009.

Verizon Wireless has, for its part, said it will purchase $240 million worth of subscribers and assets that AT&T is attempting to purchase as part of a pending acquisition of Centennial Communications. It is expected that selling off these parts of Centennial to Verizon will gain AT&T the regulatory approval it needs to complete the deal. This would result in nearly 120,000 subscribers being added to Verizon Wireless.