Alltel to acquire somebody else in 2006, but who?

[ComicalMoodyDan]

Alltel sees 2006 revenue up as much as 10 pct
Wed Feb 1, 2006 2:21 PM ET
By Sinead Carew

NEW YORK, Feb 1 (Reuters) - Rural telephone company Alltel Corp. (AT.N: Quote, Profile, Research) said on Wednesday it expects 2006 revenue to increase as much as 10 percent, citing an upcoming acquisition and increasing demand for services such as mobile Web surfing.

Alltel, which derived about 65 percent of its 2005 revenue from wireless, has decided to focus entirely on that business as the number of home phones has been declining. The outlook excludes Alltel's local phone business, which it is spinning off through a deal with Valor Communications Group Inc. (VCG.N: Quote, Profile, Research).

Alltel, which bought Western Wireless in August for about $4.5 billion, said it expects 2006 revenue of $7.85 billion to $8.02 billion, compared with $7.27 billion a year ago, assuming it owned Western Wireless in both years.

Chief Financial Officer Sharilyn Gasaway said revenue growth assumes increasing data growth and Alltel's pending purchase of another company, Midwest Wireless Holdings, which was not included in year-earlier numbers.

"You see the increases in data revenues and the Midwest wireless transaction will impact (2006 revenue)," she said on the sidelines of the company's investor conference.

The outlook also assumes the company closes the $1.075 billion Midwest Wireless Holdings deal around mid-year.

Operators around the world, including Alltel, are building high-speed networks to boost revenue with advanced services such as Web surfing and text messaging as the prices consumers pay for phone calls decline amid tough competition.

Group President Kevin Beebe said he expects 2006 growth in average monthly revenue per user (ARPU) to slow due to falling prices for phone calls.

"I'd love to be able to say 3 to 5 percent growth for ARPU in 2006. I don't see that happening because of price competition," he told investors. Beebe said he hopes data, on which Alltel will depend for growth, will represent at least 7.5 percent of revenue for 2006, up from 5 percent in 2005.

Alltel expects 2006 earnings per share from current businesses to grow 5 percent from $3.41 in 2005. This would equate to earnings per share of about $3.58 for 2006.

It forecast 2006 operating income before depreciation and amortization of $2.723 billion to $2.823 billion, up from $2.49 billion a year ago.

Robert W. Baird analyst Will Power said the earnings outlook was "modestly above" what he was looking for. He added that it may ease investor concern about increasing costs as Alltel operates its wireless and wireline businesses separately until the spin-off, expected to be completed by mid year.

"It should allay whatever concerns investors might have ... as regards duplicate spending," Power said.

In response to a question, Chief Executive Scott Ford said Alltel, which competes with four national wireless services but does not have national coverage itself, could look at acquisitions at the right price.

"Are there transactions we would like to do to expand our footprint? Sure .... But we're not driven to be a national company. I don't get the correlation between national and profitable," he told investors.

Potential acquisition prospects may include smaller rivals Dobson Communications Corp. (DCEL.O: Quote, Profile, Research) , Rural Cellular Corp. (RCCC.O: Quote, Profile, Research) or U.S. Cellular Corp. (USM.A: Quote, Profile, Research), analysts said.

http://yahoo.reuters.com/stocks/Quot...87&symbol=AT.N

[hillbilly44]

Best guess, US Cellular. Why? same technology, coverage footprints fits well with Alltel in Midwest & South

[Etorres777]

Originally Posted by hillbilly44

Best guess, US Cellular. Why? same technology, coverage footprints fits well with Alltel in Midwest & South

That's exactly what I was thinking, US Cellular would be it.

[larry]

How about T-Mobile

[ShoresGuy]

Not very likely that DT would let that happen .....they definitely won't let go of the US market. If they would, I'm sure Vodafone would be the first one to go for T-Mobile USA.

[Matt]

Originally Posted by larry

How about T-Mobile

LOL. Too bad TM is twice as big as AT, and DT isn't selling anyway. As ShoresGuy noted, TM USA is the star in DT's portfolio.

[inquirer22]

Originally Posted by HillBilly44

Best guess, US Cellular. Why? same technology, coverage footprints fits well with Alltel in Midwest & South

Originally Posted by Etorres777

That's exactly what I was thinking, US Cellular would be it.

If US Cellular were for sale I would much rather see them go to Alltel than to Verizon. However, do not forget just how much overlap there is now between Alltel & US Cellular:

eastern Kansas
all but extreme western Nebraska
Iowa where Midwest Wireless is
parts of Wisconsin
eastern North Carolina

There are probably others, but these come to mind without looking at the map.

What is sad is that even if they were merged, they are still both locked out of a large part of California and the northeast where Vz & Cingular have a lock on the 850 frequencies. The same goes for more populous areas of Oregon, Washington, Idaho, Utah, Nevada, Colorado in the west. In the south, they are still large parts of Texas & Florida they aren't in. (Thanks to the FCC for allowing Cingular to monopolize A&B sides of 850.) THey also don't have areas of northern Alabama, northern Georgia, parts of Tenessee, Kentucky too...

I wish them both luck, but it will still be difficult whatever they do to become national and NOT have to rely on companies to give them good roaming deals. If this was 2010 when the current Alltel/Vz roaming deal expires, Alltel would be struggling.

[agentHibby]

If I were guessing it would be Cellcom, maybe rural Cellular. I doubt Bluegrass Cellular, but you never know.

I am thinking that if US Cellular and Cellular South get boughtout it will be VZW buying them.

Right now USCellular is not pleased with Alltel getting MidWest Wireless. US Cellular has filed a form to the FCC to deny the merger.

[ComicalMoodyDan]

Originally Posted by inquirer22

If US Cellular were for sale I would much rather see them go to Alltel than to Verizon. However, do not forget just how much overlap there is now between Alltel & US Cellular:

eastern Kansas
all but extreme western Nebraska
Iowa where Midwest Wireless is
parts of Wisconsin
eastern North Carolina

There are probably others, but these come to mind without looking at the map.

What is sad is that even if they were merged, they are still both locked out of a large part of California and the northeast where Vz & Cingular have a lock on the 850 frequencies. The same goes for more populous areas of Oregon, Washington, Idaho, Utah, Nevada, Colorado in the west. In the south, they are still large parts of Texas & Florida they aren't in. (Thanks to the FCC for allowing Cingular to monopolize A&B sides of 850.) THey also don't have areas of northern Alabama, northern Georgia, parts of Tenessee, Kentucky too...

I wish them both luck, but it will still be difficult whatever they do to become national and NOT have to rely on companies to give them good roaming deals. If this was 2010 when the current Alltel/Vz roaming deal expires, Alltel would be struggling.

I wish Alltel would purchase Cricket and Metro PCS. There would be some overlap between Alltel and those two companies but not enough to be a deal breaker. If Alltel purchased Cricket they would receive coverage in the folllowing cities where they currently have none.

1. Fresno, Modesto, Merced, and Visalia, CA
2. Eugene and Salem, OR
3. Nashville, Knoxville, Chattanooga, and Memphis, TN
4. Pittsburgh, PA
5. Buffalo and Syracuse, NY

If Alltel purchased Metro PCS they would receive coverage in the following areas:

1. San Francisco and Sacramento, CA
2. Miami, FL
3. Atlanta, GA
4. While Metro PCS does not serve Los Angeles, CA yet they do have a license for that area and I believe are working on building a network there.

As you can see Alltel buying Cricket and Metro PCS would give them quite a bit of new markets as well as some coverage in some very important markets. Both are CDMA companies just like Alltel so integrating two different technologys wouldn't be present in this transaction.

[bobolito]

Metro PCS also services FL.

[bobolito]

Originally Posted by larry

How about T-Mobile

That would not be such a bad idea. Alltel would find it is cheaper just to convert its CDMA footprint to GSM being that with T-Mo most of Alltel would be GSM anyway (Alltel already has a GSM network in place from the WW merger). In the end, Verizon and Sprint would be left with significantly less roaming areas especially in rural areas. Guess who would be taking advantage of those GSM rural roaming deals.

Disclaimer: Don't flame me...just playing.

[ComicalMoodyDan]

Originally Posted by bobolito

Metro PCS also services FL.

As does Alltel but only roughly half the state. I believe the markets Metro PCS covers in Florida already have Alltel coverage. Except maybe Miami? I believe Metro PCS has coverage in Miami and I'm thinking Alltel doesn't have coverage there but I'm not sure.

[ComicalMoodyDan]

Update: Metro PCS does have coverage in Miami, FL and Alltel does not. I'm going to add Miami to the list of Metro PCS markets that Alltel doesn't serve.

[bobolito]

My cousin uses Metro POS in Miami, that's how I know.

[agentHibby]

Metro PCS has been getting more airwaves in FL like getting most if not all of US Cellular's PCS airwaves in FL.

Getting either one will give Alltel some metro coverage in California. Since Alltel only has rural coverage in CA.

[Dogma]

Originally Posted by agentHibby

If I were guessing it would be Cellcom, maybe rural Cellular.

Right now USCellular is not pleased with Alltel getting MidWest Wireless. US Cellular has filed a form to the FCC to deny the merger.

I read that as well on the FCC page. IMO US Cellular is trying to force Alltel to give up the A-Side in Minnesota.....which I think will happen anyways.

[strunke]

Originally Posted by inquirer22

If US Cellular were for sale I would much rather see them go to Alltel than to Verizon. However, do not forget just how much overlap there is now between Alltel & US Cellular:

eastern Kansas
all but extreme western Nebraska
Iowa where Midwest Wireless is
parts of Wisconsin
eastern North Carolina

There are probably others, but these come to mind without looking at the map.

What is sad is that even if they were merged, they are still both locked out of a large part of California and the northeast where Vz & Cingular have a lock on the 850 frequencies. The same goes for more populous areas of Oregon, Washington, Idaho, Utah, Nevada, Colorado in the west. In the south, they are still large parts of Texas & Florida they aren't in. (Thanks to the FCC for allowing Cingular to monopolize A&B sides of 850.) THey also don't have areas of northern Alabama, northern Georgia, parts of Tenessee, Kentucky too...

I wish them both luck, but it will still be difficult whatever they do to become national and NOT have to rely on companies to give them good roaming deals. If this was 2010 when the current Alltel/Vz roaming deal expires, Alltel would be struggling.

I don't know about struggling. They certainly wouldn't be as profitable, but they wouldn't be struggling. Remember most of their customers are in their home coverage. If Verizon rates go up it wouldn't be much more money because people don't usually live in the areas where there is only Verizon and have Alltel. Alltel is not actually striving to be a national carrier, at least judging by comments in their press releases. Now if Verizon cut them off entirely (which would be trouble for Verizon too) and Sprint also did and Alltel would only let the customers roam for 59 cents a minute, then they would be struggling.

[MOTOhooligan]

If Alltel acquires USCC they will have to divest a few markests, but I think the FCC would still approve it. The funny thing is that the Kansas and Nebraska markets USCC picked up after the Alltel/WWC merger would have . Then my parents would be double divested.

As for Alltel acquiring T-Mobile, I think you've got that backwards. If anyone is acquiring anyone, T-Mobile would acquire Alltel since they have DT's backing. It makes sense, if you think about it. T-Mobile needs a larger network, Alltel already has a large portion of it's network set up for GSM roaming thanks to WWC. T-Mobile could buy Alltel, keep everyone on CDMA while utilizing the GSM network for a larger coverage area for it's heritage GSM customers then change everyone to 3G or 4G when the time comes. That way you don't have to convert everyone on CDMA to GSM.

[ShoresGuy]

If that should happen, then T-Mobile will also have to divest Alltel's WW int'l assets that weren't already sold as part of the WW takeover. T-Mobile bought tele.ring in Austria from Alltel and EirComm bought Meteor. It would also allow them to enter markets like Slovenia where Alltel still owns VEGA which was set up by Western Wireless.

[TKR]

The original posting had this statement in the article:

"The outlook also assumes the company closes the $1.075 billion Midwest Wireless Holdings deal around mid-year."

Is that not the referred "future acquisition" of the first paragraph?

[Andy]

Originally Posted by TNDan21

I wish Alltel would purchase Cricket and Metro PCS. There would be some overlap between Alltel and those two companies but not enough to be a deal breaker. If Alltel purchased Cricket they would receive coverage in the folllowing cities where they currently have none.

1. Fresno, Modesto, Merced, and Visalia, CA
2. Eugene and Salem, OR
3. Nashville, Knoxville, Chattanooga, and Memphis, TN
4. Pittsburgh, PA
5. Buffalo and Syracuse, NY

If Alltel purchased Metro PCS they would receive coverage in the following areas:

1. San Francisco and Sacramento, CA
2. Miami, FL
3. Atlanta, GA
4. While Metro PCS does not serve Los Angeles, CA yet they do have a license for that area and I believe are working on building a network there.

As you can see Alltel buying Cricket and Metro PCS would give them quite a bit of new markets as well as some coverage in some very important markets. Both are CDMA companies just like Alltel so integrating two different technologys wouldn't be present in this transaction.

CricKet also serves the Wasatch Front Area of Northern Utah where the population is and then they would not only have a network in central/southern UT but also in northern Utah and would be a huge player here with their pricing and strong network throughout the state.

[Dogma]

Originally Posted by agentHibby

If I were guessing it would be Cellcom, maybe rural Cellular.
Right now USCellular is not pleased with Alltel getting MidWest Wireless. US Cellular has filed a form to the FCC to deny the merger.

Anybody have an idea how long Cellcom is going to hang around? They are really a small island of a footprint around Green Bay. I would imagine they would have to be thinking of selling. Alltel does seam like a logical buyer there.