AT&T Buying Old Alltel Assets Spun Off by Verizon
AT&T unveiled a small spectrum buy Tuesday, proposing to pay Atlantic Tele-Network $780 million for former Alltel assets Verizon Wireless had spun off in a deal that closed in April 2010. The deal gives AT&T spectrum licenses mostly in the 850 MHz band, network assets, retail stores and some 585,000 subscribers in rural parts of six states -- Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina, the companies said. The deal must be cleared by the FCC and the Department of Justice.
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ATN CEO Michael Prior said on a call with analysts Tuesday the company owns an average of 35 MHz in spectrum covering 4.6 million people. ATN also owns a much smaller amount of 700 MHz and PCS spectrum, Prior said. He estimated the deal will close in the second half of the year during the call.
Verizon had to spin off the assets as part of its $28 billion 2008 buy of Alltel. ATN paid $200 million for the assets in a deal unveiled in June 2009. The company ultimately plowed another $85 million into the wireless assets, Prior said Tuesday. “We really did look at a number of strategies and alternatives going forward and we decided this was the best course,” Prior said. “I can’t speak to AT&T, how they would evaluate this.”
All purchases by AT&T and Verizon Wireless have faced some questions from competitors and public interest groups in recent years. “We will take a look at the details, as we always do,” said Free Press Policy Director Matt Wood. “Each additional transaction leads to more industrywide concentration, so when you look back over the course of several seemingly small deals you find a lot fewer players in the field. That’s why we proposed in our spectrum aggregation comments that the FCC develop objective measures for analyzing transactions that likely would fall below any spectrum screen."
New Street Research said the deal will apparently give AT&T more spectrum in some markets where its spectrum position has been historically weak. AT&T paid about $1.40 MHz/POP “which we view as reasonable for mostly 850MHz spectrum (though not cheap),” the firm said in a research note.
If the deal is approved, “Alltel’s customers will benefit from access to a nationwide 4G network, a larger device selection, additional retail locations and a broader range of product offerings,” ATN said in a news release (http://xrl.us/bobv5k). “Additionally, many of our employees should benefit from new career opportunities within AT&T. We will work closely with AT&T to close the transaction and to ensure a smooth transition for our customers and employees.” ATN is a small telco based in Beverly, Mass., which serves rural and niche markets in the U.S., Bermuda and the Caribbean.