AT&T announced that they have reached an agreement to buy Alltel for $780 million in cash in a bid to boost its presence in rural areas. The deal includes the licenses, retail stores and network assets and the 585,000 subscribers of Atlantic Tele-Network Inc. The announcement boosted the stocks of both companies with AT&T gaining 30 cents closing at $33.74 while Alltel gained $4.73 closing at $44. 10.
Alltel has coverage in six states namely Georgia, Illinois, Idaho, Ohio, North Carolina and South Carolina. The company previously operated in 34 states before it was bought by Verizon Wireless in 2009. Federal regulators have ordered Verizon to sell of parts of the company to AT&T and ATN.
AT&T said that services will improve in the covered areas for both AT&T as well as Alltel subscribers. The company will however be making changing the CDMA technology being used by Alltel to GSM technology. This means that existing Alltel subscribers will have to change their CDMA phones to GSM phones. The cost of conversion from CDMA to GSM will not have any significant impact on the company’s revenue.
The deal is still subject to approval from the Federal Communications Commission as well as the Department of Justice. Both companies are optimistic that the approval will be granted on the second half of this year.
AT&T is a premier telecommunications company based in Dallas, Texas. The company is the largest provider of mobile and fixed telephony in the United States. In 2010 Consumer Reports named the company the worst wireless provider in the country. In 2011 the company held on to this title making it two in a row. Alltel subscribers will now be able to experience the service first hand once the deal gets approved.
Alltel is a wireless service provider that is based in little rock, Arkansas. Before its purchase by Verizon Wireless it operated the largest network in the United States in terms of coverage area.