U.S. telecom giant
) announced that it has agreed to buy the remaining portion of
Alltel's wireless operations from
Atlantic Tele-Networks Inc.
) for a cash consideration of about $780 million.
AT&T will be purchasing spectrum licenses, retail stores,
network assets and will get 585,000 subscribers from Alltel
spread across six states, particularly in the South and Midwest
U.S. The deal is subject to approval by the Federal Communication
Commission (FCC) and Justice department and AT&T expects to
close the deal in the second half of 2013.
Alltel used to operate in 34 U.S. states before it was bought
by Verizon wireless, for $28.1 billion on January 2009, making it
the largest wireless carrier in the US. However, in 2010, Verizon
sold its business in six states to Atlantic for $223 million.
Higher proliferation of smartphones and tablets has increased
the demand for online games and HD movie downloads, which in turn
has fueled the demand for spectrum. AT&T started addressing
the spectrum issue with a failed attempt to buy T-Mobile USA for
$39 billion in December 2011.
AT&T signed multiple deals in 2012, including a $600
million deal to acquire NextWave Wireless. The company also
signed a radio wave deal with
) and Horizon Wi-Com LLC to meet its demand for spectrum going
We believe the transaction is highly accretive to AT&T as
it will allow the company to improve the mobile Internet services
in the rural areas where customers are facing reduced network
speed. Most importantly, the acquisition will aid the company to
snap up the much needed spectrum to match
Verizon Communication Inc.'s
) spectrum capacity.
Although the acquired spectrum in the 700, 800 and 1500 MHz
matches with AT&T's network, the second largest carrier in
the U.S. needs to convert the cell towers of Alltel as it uses
CDMA (Code Division Multiple Access) technology while AT&T
uses GSM (Global System for Mobile) technology.
We currently, maintain a short-term Zacks Rank #3 (Hold) on
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