WirelessAdvisor.com

TNDan21 · 02-21-2007, 4:07 PM

Alltel sale could fetch $30 billion
The top rural U.S. wireless provider fueled merger speculation during its earnings call Tuesday.
February 20 2007: 9:56 PM EST

NEW YORK/PHILADELPHIA (Reuters) -- Alltel Corp. could fetch a price tag of $25 billion to $31 billion from private equity firms or other U.S. mobile service providers looking to expand in rural markets, analysts said Tuesday.

Alltel, the top rural U.S. wireless provider, fueled merger speculation when it said during an earnings conference call Tuesday that it was reviewing its strategic options. Analysts said a sale agreement could happen as early as April.

Its shares rose 3.3 percent to $62.40 after the comments, also spurred by better-than-expected quarterly results.

With most Americans already owning cell phones, Alltel is an attractive target for other telecoms carriers looking for acquisitions to drive growth, analysts said.

"Since we're at such high penetration rates in the U.S. it's going to be a lot easier to grow going forward by acquisition than by stealing from other carriers," said Janco Group analyst Donna Jaegers.

Some analysts said Verizon Communications (Charts) was the most likely company to bid for Alltel (Charts) as Verizon Wireless uses the same CDMA network technology, making any merger easier. Verizon Wireless has the second-biggest U.S. customer base but leads in terms of revenue.

Alltel, with 12 million customers, could also attract bids from AT&T's (Charts) Cingular Wireless, Sprint Nextel (Charts) or Deutsche Telekom AG's T-Mobile USA, analysts said.

Jaegers said Alltel could sell to a rival for as much as $67 a share, or a total of $25 billion, assuming a valuation of about 9 times estimated earnings before interest, tax, depreciation and amortization (EBITDA).

She said her valuation was based on Alltel's own $1 billion purchase of smaller rival Midwest Wireless last year, which was the most recent wireless merger deal.

Bidding war?
Amid a wave of mergers and acquisitions in telecoms, Alltel Chief Executive Scott Ford has been eyeing a sale since the Little Rock, Arkansas-based company spun off its fixed-line arm last year, according to a source familiar with the situation.

Alltel has approached AT&T, Verizon and Sprint, and "made the rounds" among some private equity firms, but no one has jumped to buy the company yet, the source said.

Another person familiar with the matter said Alltel started its strategic review because it had been casually approached by potential suitors, but that no decision has been made yet.

Michael Nelson, an analyst at Stanford Group, said private equity firms would like Alltel's low debt and strong earnings outlook and could bid as much as $69 per share. Telecoms rivals could pay as much as $83 per share, implying price tags of $25.75 billion to $30.9 billion, he said.

Alltel ended 2006 with $2.7 billion in long-term debt.

Nelson said private equity firms, which have bought a series of technology companies last year, were more likely acquirers than Alltel's wireless rivals.

"I would say Verizon's the most likely strategic buyer," he said. But since Verizon has grown nicely on its own, "I still don't believe Verizon is a willing buyer of the asset unless their hand is forced and they risk losing it," Nelson added.

Stifel Nicolaus analyst Chris King said if a bidding war emerged, "you could make a case for" a price tag of about $29.8 billion, which would be 10 times his target for 2007 EBITDA.

Analysts said Alltel would likely aim for a sale agreement by April or May, ahead of a U.S. government sale of wireless airwaves that could take place as early as August. Rival bidders are barred from talking to each other once they register to take part in the auction.

Jaegers said Alltel could also be a good fit for regional fixed-line service provider Qwest Communications (Charts), which does not have a wireless network.

But Qwest, one of the smallest U.S. regional home phone providers, may not be the preferred choice as Alltel could wring more savings from hooking up with a wireless rival. As a bigger mobile player, Alltel would also be able to demand deeper discounts from handset makers.

Analysts said No. 3 U.S. wireless provider Sprint Nextel could be a bidder as it also uses CDMA technology, but they note that Sprint's financial results have flagged in recent quarters as it struggled to integrate its Nextel purchase.

Cingular, the U.S. market leader by subscribers, has been on an acquisition spree in recent years. Alltel runs only part of its network on GSM, the network technology used by Cingular and No. 4 rival T-Mobile USA.

Representatives for the companies in this story declined to comment or were not immediately available for comment.

http://money.cnn.com/2007/02/20/news...s/alltellsale/

larry · 02-21-2007, 4:30 PM

Oh boy here we go with the speculation!

bobolito · 02-21-2007, 4:39 PM

I wouldn't mind if Verizon bought Alltel CDMA and sold their GSM network to Cingular.

Mobile Mike · 02-21-2007, 4:41 PM

Quote:

Originally Posted by larry

Oh boy here we go with the speculation!

Well, since we are speculating....

If Verizon was to acquire Alltel, how much would they REALLY have to divest? Is their really that much overlap between the two? From looking at the coverage maps shown in the thread in the General Wireless Discussion forum, it looks like there is some overlap, but not as much as I've read people mention on this site. It looks like Verizon would gain more than they would lose, but I'm not an expert on this, so I pose these questions to those of you who know for sure.

larry · 02-21-2007, 4:43 PM

Bad for competition if Verizon is allowed to buy them. If anything I'd like to see US Cellular or T-Mobile join up with them to avoid creating a monopoly.

Be careful what you wish for because another mega-merger will only cause prices to go up. And why would we want that?

Mobile Mike · 02-21-2007, 4:43 PM

Quote:

Originally Posted by bobolito

I wouldn't mind if Verizon bought Alltel CDMA and sold their GSM network to Cingular.

Nah, they should sell it to T-Mobile...They need it more...

larry · 02-21-2007, 4:44 PM

Quote:

Originally Posted by bobolito

I wouldn't mind if Verizon bought Alltel CDMA and sold their GSM network to Cingular.

Where are they GSM?

TNDan21 · 02-21-2007, 5:32 PM

Quote:

Originally Posted by larry

Where are they GSM?

Alltel maintains a GSM roaming network in the US. Below is a coverage map of Alltel's GSM network according to GSM World.

Fire14 · 02-21-2007, 5:54 PM

Quote:

Originally Posted by larry

Bad for competition if Verizon is allowed to buy them. If anything I'd like to see US Cellular or T-Mobile join up with them to avoid creating a monopoly.

Be careful what you wish for because another mega-merger will only cause prices to go up. And why would we want that?

I agree it would be bad if Verizon or Cingular bought them out & I don't know if AT&T is in a position right now to spend this type of money.

Other options would be Dobson/Cellular one or Vodafone. But right now T-Mobile could make the most out of it, if they have the cash to change the network over to GSM, especially with their AWE buildout in the works.

For Vodafone, if they got $50 Million for their share from Verizon, they might be able to do it, and have some left over for the 700 Mhz auction.

larry · 02-21-2007, 7:58 PM

After the AT&T/Cingular and Sprint/Nextel mergers finalized, prices started to go up across the board. So I would hope nobody wants to see another mega merger happen that would only cause prices to inch up even further. T-Mobile/Alltel would be the only scenario that wouldn't be that bad for consumers.

Mobile Mike · 02-21-2007, 8:01 PM

Quote:

Originally Posted by larry

After the AT&T/Cingular and Sprint/Nextel mergers finalized, prices started to go up across the board. So I would hope nobody wants to see another mega merger happen that would only cause prices to inch up even further. T-Mobile/Alltel would be the only scenario that wouldn't be that bad for consumers.

Larry, do you think that a T-Mobile/Alltel combination would work with their 2 separate technologies?? Would it really be worth it for T-Mobile to consider such a merger??

larry · 02-21-2007, 8:16 PM

I think the feds would likely approve a T-Mobile/Alltel merger rather easily. However I can't see them approving an AT&T/Alltel merger or a Verizon/Alltel merger without a lot of red tape.

If Sprint can merge with a company that uses a completely different technology than I don't see why T-Mobile can't.

AT&T and Verizon already have a lof of native rural coverage so they don't really need Alltel as much as T-Mobile does.

MOTOhooligan · 02-21-2007, 8:43 PM

I don't want to get bought again.

Telekom · 02-21-2007, 9:22 PM

Quote:

Originally Posted by Mobile Mike

Larry, do you think that a T-Mobile/Alltel combination would work with their 2 separate technologies?? Would it really be worth it for T-Mobile to consider such a merger??

Alltel already has some GSM coverage. When Alltel acquired Western Wireless WW already had some roaming GSM coverage. Of course it's not unheard of for a carrier that takes over a market to change the technology that is being used in favor of another. Seems to me that I recently read about a carrier that took over a network and changed it from CDMA to GSM. Of course when cingular came into the Seattle market they changed the CDMA network that was GTE Mobile Systems and installed a GSM 1900 network. They are rare where the technology changes but they do happen.

WiggyFife · 02-21-2007, 11:55 PM

Quote:

Originally Posted by larry

Bad for competition if Verizon is allowed to buy them. If anything I'd like to see US Cellular or T-Mobile join up with them to avoid creating a monopoly.

Be careful what you wish for because another mega-merger will only cause prices to go up. And why would we want that?

So that the fur can continue to fly from all the haters over at HoFo... that's why!!!

Fathead · 02-22-2007, 12:19 AM

I could definately see Verizon trying it, but I wonder if they'll be able to get value out of it after the fire sale it would take to get it approved.

strunke · 02-22-2007, 1:10 AM

Quote:

Originally Posted by Telekom

Alltel already has some GSM coverage. When Alltel acquired Western Wireless WW already had some roaming GSM coverage. Of course it's not unheard of for a carrier that takes over a market to change the technology that is being used in favor of another. Seems to me that I recently read about a carrier that took over a network and changed it from CDMA to GSM. Of course when cingular came into the Seattle market they changed the CDMA network that was GTE Mobile Systems and installed a GSM 1900 network. They are rare where the technology changes but they do happen.

Yes since Alltel bought out WW's GSM they have even expanded it a little. Only putting it where they know there are not many other GSM carriers for roaming revenue.

Mobile Mike · 02-22-2007, 1:51 AM

Quote:

Originally Posted by Fathead

I could definately see Verizon trying it, but I wonder if they'll be able to get value out of it after the fire sale it would take to get it approved.

Fathead, do you know how much they would really have to divest???

Is there really that much overlap? I'm dying to know...

Dogma · 02-22-2007, 3:39 AM

I personally would like to see Alltel do some buying of there own. A couple key mergers by them would vault them into the spotlight. Alltel buying US Cellular and Metro PCS would make things interesting. A Verizon or Sprint buying Alltel just makes the competitive nature of wireless that much less. Having 5 National providers would help keep prices down and be good for the wireless industry as a whole. I think its only a matter of time before USCC and Metro PCS are gulped up anyways.

02-21-2007, 4:07 PM	#1 (permalink)
TNDan21 Join Date: Dec 2001 Location: Kingsport, TN Posts: 5,964 Phone(s): LG enV2, Samsung t219 Provider(s): Verizon Wireless, T-Mobile Devices: iPod Nano Thanks: 0 Thanked 8 Times in 6 Posts	Alltel sale could fetch $30 billion Alltel sale could fetch $30 billion The top rural U.S. wireless provider fueled merger speculation during its earnings call Tuesday. February 20 2007: 9:56 PM EST NEW YORK/PHILADELPHIA (Reuters) -- Alltel Corp. could fetch a price tag of $25 billion to $31 billion from private equity firms or other U.S. mobile service providers looking to expand in rural markets, analysts said Tuesday. Alltel, the top rural U.S. wireless provider, fueled merger speculation when it said during an earnings conference call Tuesday that it was reviewing its strategic options. Analysts said a sale agreement could happen as early as April. Its shares rose 3.3 percent to $62.40 after the comments, also spurred by better-than-expected quarterly results. With most Americans already owning cell phones, Alltel is an attractive target for other telecoms carriers looking for acquisitions to drive growth, analysts said. "Since we're at such high penetration rates in the U.S. it's going to be a lot easier to grow going forward by acquisition than by stealing from other carriers," said Janco Group analyst Donna Jaegers. Some analysts said Verizon Communications (Charts) was the most likely company to bid for Alltel (Charts) as Verizon Wireless uses the same CDMA network technology, making any merger easier. Verizon Wireless has the second-biggest U.S. customer base but leads in terms of revenue. Alltel, with 12 million customers, could also attract bids from AT&T's (Charts) Cingular Wireless, Sprint Nextel (Charts) or Deutsche Telekom AG's T-Mobile USA, analysts said. Jaegers said Alltel could sell to a rival for as much as $67 a share, or a total of $25 billion, assuming a valuation of about 9 times estimated earnings before interest, tax, depreciation and amortization (EBITDA). She said her valuation was based on Alltel's own $1 billion purchase of smaller rival Midwest Wireless last year, which was the most recent wireless merger deal. Bidding war? Amid a wave of mergers and acquisitions in telecoms, Alltel Chief Executive Scott Ford has been eyeing a sale since the Little Rock, Arkansas-based company spun off its fixed-line arm last year, according to a source familiar with the situation. Alltel has approached AT&T, Verizon and Sprint, and "made the rounds" among some private equity firms, but no one has jumped to buy the company yet, the source said. Another person familiar with the matter said Alltel started its strategic review because it had been casually approached by potential suitors, but that no decision has been made yet. Michael Nelson, an analyst at Stanford Group, said private equity firms would like Alltel's low debt and strong earnings outlook and could bid as much as $69 per share. Telecoms rivals could pay as much as $83 per share, implying price tags of $25.75 billion to $30.9 billion, he said. Alltel ended 2006 with $2.7 billion in long-term debt. Nelson said private equity firms, which have bought a series of technology companies last year, were more likely acquirers than Alltel's wireless rivals. "I would say Verizon's the most likely strategic buyer," he said. But since Verizon has grown nicely on its own, "I still don't believe Verizon is a willing buyer of the asset unless their hand is forced and they risk losing it," Nelson added. Stifel Nicolaus analyst Chris King said if a bidding war emerged, "you could make a case for" a price tag of about $29.8 billion, which would be 10 times his target for 2007 EBITDA. Analysts said Alltel would likely aim for a sale agreement by April or May, ahead of a U.S. government sale of wireless airwaves that could take place as early as August. Rival bidders are barred from talking to each other once they register to take part in the auction. Jaegers said Alltel could also be a good fit for regional fixed-line service provider Qwest Communications (Charts), which does not have a wireless network. But Qwest, one of the smallest U.S. regional home phone providers, may not be the preferred choice as Alltel could wring more savings from hooking up with a wireless rival. As a bigger mobile player, Alltel would also be able to demand deeper discounts from handset makers. Analysts said No. 3 U.S. wireless provider Sprint Nextel could be a bidder as it also uses CDMA technology, but they note that Sprint's financial results have flagged in recent quarters as it struggled to integrate its Nextel purchase. Cingular, the U.S. market leader by subscribers, has been on an acquisition spree in recent years. Alltel runs only part of its network on GSM, the network technology used by Cingular and No. 4 rival T-Mobile USA. Representatives for the companies in this story declined to comment or were not immediately available for comment. http://money.cnn.com/2007/02/20/news...s/alltellsale/

02-21-2007, 4:30 PM	#2 (permalink)
larry Go Angels! Join Date: Oct 2001 Location: Orange County, CA Posts: 12,954 Phone(s): LG Rumor Provider(s): Sprint Thanks: 17 Thanked 16 Times in 15 Posts Images: 146 My Auctions	Re: Alltel sale could fetch $30 billion Oh boy here we go with the speculation!

02-21-2007, 4:39 PM	#3 (permalink)
bobolito iPhone 3G 16GB (White) Join Date: May 2002 Location: New Sanfrakota Posts: 12,398 Phone(s): iPhone 3G, RAZR V9, Sierra 875 3G Aircard, HP iPaq Classic 110 Provider(s): AT&T Mobility Devices: WiFi cards/Access points Thanks: 3 Thanked 11 Times in 10 Posts Images: 50 My Auctions	Re: Alltel sale could fetch $30 billion I wouldn't mind if Verizon bought Alltel CDMA and sold their GSM network to Cingular. __________________

02-21-2007, 4:43 PM	#5 (permalink)
larry Go Angels! Join Date: Oct 2001 Location: Orange County, CA Posts: 12,954 Phone(s): LG Rumor Provider(s): Sprint Thanks: 17 Thanked 16 Times in 15 Posts Images: 146 My Auctions	Re: Alltel sale could fetch $30 billion Bad for competition if Verizon is allowed to buy them. If anything I'd like to see US Cellular or T-Mobile join up with them to avoid creating a monopoly. Be careful what you wish for because another mega-merger will only cause prices to go up. And why would we want that?

02-21-2007, 7:58 PM	#10 (permalink)
larry Go Angels! Join Date: Oct 2001 Location: Orange County, CA Posts: 12,954 Phone(s): LG Rumor Provider(s): Sprint Thanks: 17 Thanked 16 Times in 15 Posts Images: 146 My Auctions	Re: Alltel sale could fetch $30 billion After the AT&T/Cingular and Sprint/Nextel mergers finalized, prices started to go up across the board. So I would hope nobody wants to see another mega merger happen that would only cause prices to inch up even further. T-Mobile/Alltel would be the only scenario that wouldn't be that bad for consumers.

02-21-2007, 8:16 PM	#12 (permalink)
larry Go Angels! Join Date: Oct 2001 Location: Orange County, CA Posts: 12,954 Phone(s): LG Rumor Provider(s): Sprint Thanks: 17 Thanked 16 Times in 15 Posts Images: 146 My Auctions	Re: Alltel sale could fetch $30 billion I think the feds would likely approve a T-Mobile/Alltel merger rather easily. However I can't see them approving an AT&T/Alltel merger or a Verizon/Alltel merger without a lot of red tape. If Sprint can merge with a company that uses a completely different technology than I don't see why T-Mobile can't. AT&T and Verizon already have a lof of native rural coverage so they don't really need Alltel as much as T-Mobile does.

02-21-2007, 8:43 PM	#13 (permalink)
MOTOhooligan Why So Serious? Join Date: Oct 2003 Location: Gotham City Posts: 6,688 Phone(s): w490, V3t, v620, Q, K1m Provider(s): Voicestream Wireless, Western Wireless Devices: Motorola S805, Motorola HS350 Thanks: 1 Thanked 11 Times in 8 Posts Images: 21	Re: Alltel sale could fetch $30 billion I don't want to get bought again. __________________ Who needs an iPhone when you've got a 2GB memory card, AD2P Bluetooth support and a wireless stereo headset?

02-22-2007, 12:19 AM	#16 (permalink)
Fathead Cingular Troll=OK! Join Date: Jun 2003 Location: Pocatello, ID Posts: 1,017 Thanks: 0 Thanked 0 Times in 0 Posts	Re: Alltel sale could fetch $30 billion I could definately see Verizon trying it, but I wonder if they'll be able to get value out of it after the fire sale it would take to get it approved. __________________ Content Deleted

02-22-2007, 3:39 AM	#19 (permalink)
Dogma Join Date: Apr 2004 Location: Minnesota Posts: 363 Phone(s): Razr vc3 Provider(s): Alltel Thanks: 0 Thanked 1 Time in 1 Post	Re: Alltel sale could fetch $30 billion I personally would like to see Alltel do some buying of there own. A couple key mergers by them would vault them into the spotlight. Alltel buying US Cellular and Metro PCS would make things interesting. A Verizon or Sprint buying Alltel just makes the competitive nature of wireless that much less. Having 5 National providers would help keep prices down and be good for the wireless industry as a whole. I think its only a matter of time before USCC and Metro PCS are gulped up anyways.

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