Verizon not interested in Alltel, CEO

I would hope that a Verizon/Alltel deal would not be allowed to go through even if they do decide they want them. The Feds need to step up and start rejecting these mergers as they will only eliminate competition and drive up prices. The carriers we have right now are perfect and the only future mergers should be between smaller companied (ie. US Cellular/Alltel).

 

I read somewhere the the merger between US Cellular and alltel would be somewhat useless because they compete in a lot of the markets that they're already in..

 

Yes some of their markets overlap but the majority do not.

 

I would like to see VZW, Cingular, and T-Mobile get licenses to cover the rest of the country that they don't already have, rather than buy anyone else out.

 

Agreed. That way prices won't be driven up. It's good to have at least 4 national carriers to choose from.

 

An Alltel/USCC merger would get Alltel into some larger metro area's....ie Chicago, St. Louis. I'm hoping Alltel plays an active part in the upcoming AWS auction. IMO, if Alltel sits on the curb for this auction, they must not plan on being around for too many more years.

 

I disagree with them getting more. They are too big as it is. Cingular has both cellular licenses A&B for a big chunk of south texas as well as the Atlantic coast of Florida. The FCC should have made them give one side.

It would be better to see more local, regionals, and/or super regionals expand than to see already national companies tighten their strangle hold on choices that the consumers have.

 

I don't mean give them more where they are. I mean open up spectrum to them in markets they don't currently exist in. 4 fully national carriers competing would be fine.

 

But why just four and specifically those? Shouldn't Alltel and US Cellular also have the same opportunity to expand their licensed coverage? If these others are considered national but don't have coverage everywhere, it is because we think in terms of national because they are in the major markets. The rural areas also want wireless coverage and that is where companies like Alltel came from. As I see it, Alltel has as much right to get into areas that they don't have coverage as does T-Mobile.

Cingular:
Why should Cingular get one more inch of licenses anywhere in the country when they horde both A& B in a large area of southern Texas and the Atlantic coasts of Florida? Shouldn't they be forced to give up where they horde spectrum before they get licenses elsewhere such as in the western states?

I'm sure Alltel would have loved to had the opportunity to get those areas since that would have basically completed what they lacked in Florida as well as linked up their west Texas holdings with their holdings in the Brownsville area.

Sprint:
Likewise, Sprint has PCS licenses for the entire country, so they really don't need anymore. There are still areas where they have to roam because they choose not to build everywhere.

Verizon:
Verizon also has a lot of PCS spectrum some of it even is from NextWave that went bankrupt. I don't think Vz has built it all out - again it was their priorities not to do so.

T-Moble:
If there is more spectrum to be opened up, it should be available to companies like Alltel and US Cellular as much as T-mobile. Plus keep in mind that T-mobile is a multinational -- they have a lot more $$$ to throw around than small carriers like Alltel and US Cellular. They probably have as much money as Cingular & Verizon which both are owned by large Bell companies (and of course Vodaphone another multinational).



This is probably all moot anyway because there will be another spectrum auction I believe this summer. I just hope that Alltel & US Cellular are able to expand. The other four have a LOT more money (including T-mobile) which puts Alltel & US Cellular at a disadvantage.

I'm not an Alltel nor a US Cellular customer. When I see how far they have come and yet they are still shut out of a lot of large markets where the big $$$ are made, it is very difficult to see where I feel very much sympathy for the larger four getting more areas. Especially when there are instances of major hording of licenses by them.

 

When did I say that I didn't think Alltell or USCC shouldn't be able to buy spectrum? I never said that. I said I wanted the big 4 to have spectrum covering the whole country so they can build out. The regionals should be able to do the same, but they are going to have major issues trying to build networks in places like LA. More power to them if they can pull it off.



And how is Cingular doing anything wrong where they own both A and B? They are not breaking any laws. It's not in any possible way wrong for them to legally hold that spectrum. If Alltel so desperately needs the spectrum, they should make a substantial offer to Cingular to aquire it. And how does holding a large chunk of spectrum in texas have anything to do with Cingular having the chance to buy spectrum elsewhere?



I'm not suggesting that the little guys get hosed, I'm saying it would be nice if at least the 4 big guys had the ability to cover the whole country. The national market needs at least 4 carriers. If the regionals can expand to another national, that would be great too. I'd just like to see at least 4 carriers who truly cover most of the country, that way we see more pricing wars.

 

I simply don't see why you limited your discussion to four carriers -- and specifically those four.
As to building networks, keep in mind that US Cellular built out St Louis. While it isn't as large as LA, that is still a commendable feat.

If the FCC had done their job, Cingular wouldn't have been allowed to keep these areas. As to Alltel making an offer to Cingular, the same could be said visa versa. If the big 4 so desperately need to expand where they don't have native coverage, they could make a substantial offer to the companies that do own spectrum where they don't. The fact is that no one should be allowed to horde spectrum. These are public airways, that is why we have the FCC regulating it in the first place.
Right now, Cingular is the worst at hording spectrum as far as square miles goes. Just because they aren't violating some law doesn't make it ethical or right. As to Cingular not being allowed to acquire anymore, that isn't that unusual. If the FCC gets on the ball, the next time Cingular tries to acquire additional assets, the FCC could require them to divest their overlap in order to allow them to acquire whatever else they want. That should happen and could happen, but I doubt it given how the FCC has made decisions the last few years.

I don't see the big four changing their pricing if their maps changed a bit more. My guess is that is the lack of national coverage by T-mobile is why they tend to have some good plans -- they have to in order to compensate for the fact that their coverage is anemic.

If you want to see a real war, let Alltel & US Cellular (maybe some others) become more national.

Case in point: In my area we have the big four only. Alltel is just one county away, and soon about the same can be said for US Cellular. (I'm in Kansas so I'm referring to the divestment of KS/Nebraska WW properties to US Cellular.) If Alltel & US Cellular could acquire PCS licenses in the urban corridor (Topeka, Lawernce, Leavenworth-Lansing, St Joe, Kansas City metro, etc) then we would really get some good competition here. (Note: It would have to be PCS because Cingular/Vz own all the cellular bands here.) US Cellular does have the right to acquire PCS licenses in just my county from Cingular (via an old ATW agreement). However, it wouldn't make any sense to do one county when our area's typical travel patterns are full of commuters. If those two companies could get licenses here, there would be a real price war.

Though I have traveled around the country. I would really like a super regional. Alltel probably comes the closest to that. However, they are shut out of the cities -- except for the Vz roaming agreement. The big four may not have licenses for the non-urban areas, but quite frankly I'm not impressed with their plans or services anyway.

Some such as Sprint have all the licenses they need, but building out non-urban areas just aren't a priority even if they do have licenses.

Right now, roaming agreements are pretty good, so I don't see where national coverage is something that any of them really are pushing for. As long as they can get customers in the major markets and can offer them affordable roaming, they are probably happy with the status quo. They are more interested in pushing 3g data offerings in the urban areas as that is where they see the big $$$.

 

1) If Alltel is so much better off financially than T-mobile's parent DT, then why are most of the rumors about a possible Alltel/T-moble buyout saying that T-mobile would buy Alltel, and not the other way around?

2) Of course Alltel isn't going to buy every thing in every auction. The most desirable licenses sell at a premium because of the bidding wars. They know what they are doing: They buy what they can find at a bargan. The WW price was probably more than they would have liked, but that was one purchase they felt they had to make in order to get it before someone else grabbed WW.

Alltel also was able to fund a lot of their expansion in the past via their dependable wireline income. However, they saw that the long term picture for wireline just isn't that good. Wireline deline in non-urban areas is at a slower pace, but it is happening. They push DSL, but of course even in some non-urban areas the local cable companies are starting to offer cable internet.

In a few months wireline will be spun off with Valor. Then Alltel will only have their wireless. They are going to have to expand as much as they can as the Vz roaming deal runs out in 2010. Though most of their markets are smaller cities, they are in some large areas -- Phoenix, Cleveland, Tampa. If they didn't really want to become national, the wouldn't hang on to properties such as the one in CT. As I see it, acquiring that little CT property was so that they would have a stepping stone into the more urban north east.

 

I limited my conversation to those 4 because I don't think anyone but those 4 are in a financial situation to be able to purchase the additional spectrum and be able to build it. If other carriers could make it work, then by all means they should do it, I just don't think it's financially possible for them. And you seem to think I'm saying that the little guys should be forced to sell what they have. I'm talking about opening up a new spectrum block (like the upcoming AWS auction) that would allow anybody to buy spectrum. And I'm advocating that Verizon, T-Mobile, and Cingular buy in areas they don't already have. There will be more than just those 3 buying in my hypothetical auction, and if they can come up with the resources to buy spectrum and build networks with it, fantastic. I'd love to see Alltel and USCC go national and compete, as both are good companies.

The main point I have is to have no more mergers with the big guys. Let them buy spectrum to fill in the holes (and I'd like seamless national coverage by them) rather than buy the little guys. I don't think the national market can afford to be reduced further. I do think that having at least 4 major carriers (more if we can get them) who compete with fairly similar, close to fully national coverage is a good thing for consumers.

 

Stock price does not mean anything. a company with 10 shares at $10 each is worth $100 (market capitalization). A company with 5 shares woth $50 each is worth $250. Alltel's market cap is about $25B, DT is about $70B. Alltel had $9 billion revenue in 2005, DT $71B. T-Mobile USA alone had over $12B revenue. AT reports $1.3B in profits in 2005, DT $6.3B. AT does havea lot less debt than DT, but they are also a much smaller company. AT had $5B debt at the end of 2005, DT about $40B. But DT is not cash strapped. Their debt is due over many years, and the have over $6B cash on their balance sheet, compared to under $900M for AT.

 

I'll take bets that by they end of '06, the Verizon/Alltel merger will be under way......any takers?

And no, I don't have any specific knowledge....just pure speculation

 

I don't think so. Verizon has a lot of debt to overcome and Alltel is relatively debt free. If Alltel doesn't want to get bought, they won't get bought because they don't have to sell.

Except for not being a 'national carrier' Alltel probably has the strongest position of any wireless carrier. I can see Alltel buying Dobson, I can see Alltel buying USCC and even some sort of T-Mobile/Alltel thing a few years down the line but I can't see Verizon buying Alltel now or in the future. Maybe in 2-3 years, Alltel will buy Verizon, depending on what Vodaphone does with their part of VZW. :browani:

 

I don't see VZW buying Alltel for a these reasons
1st too many divestements and may not get the thumbs up from the DOJ
2nd because of all the divestments who is going to get them?? Probably Cingular will end up with most of them and that is not what Verizon wants.
3rd Verizon has always used Alltel for divestments. They would have to find someone else for divestments.


Verizon buying Midwest Wireless looked to be a perfect fit and they let Alltel do the buying. This may be a smart deal if VZW does buyout US Cellular. It will be less markets that they would have to divest, and could be the difference in getting the thumbs up from the DOJ if a deal like that were to happen.

 

Yes, there would be quite a bit of divesting to do, but I don't think that would scare Verizon off at all. Alltel's actions the past year just seam like they are grooming themselves to be bought by Verizon IMO. Buying Midwest Wireless (saving Verizon from doing that, then buying Alltel later), selling off their wireline business to be a total "wireless company", buying out remaining % of properties in the Carolinas, buyout of First Cell of Southern Ill....I think the signs are there. Not to mention business analysts are still toting this merger in write ups.

 

I'll bet $20 that it won't happen by the end of 06. The Feds wouldn't and shouldn't approve such a merger.

 

I agree with the "shouldn't" part of your statement.

 

There was a thread on HF about this recently, and somebody went through and listed the top 100 markets, and of the top 100, Verizon and Alltel only compete in 30 of them. This person ("TZ617") went on to state that by population, Alltel and Verizon only compete in markets nationwide that represent about 20% or so (by population, not by the # of markets) of the country.

Assuming his data is correct, I don't see why the FCC would automatically shoot down this merger.

All I know is this...I don't trust any CEO saying he's not interested in a merger/buyout/takeover/etc. Cause IF they are in negotiations with another company, they'll usually deny it until a deal is inked.

 

I believe that Alltel should stay alone and work on buying US Cellular or T-Mobile instead. That would be better for competition and still keep prices low.

30 markets is still a lot to divest.

 

Alltel also has a number of international assets that they'd have to divest before Verizon would be interested in buying them. VZW is definitely not interested in investing in foreign countries like Slovenia or Austria where Alltel still owns VEGA (Slovenia) and tele.ring (Austria) that were part of Western Wireless International.

 

Well, the 30 markets that they overlap in the top 100...not all of them would have to be divested, as there is plenty of competition in most of the top 100. If such a merger were to go through, the folks who can't afford to lose a competitor are those who live in rural areas where there may only be 2 or 3 carriers currently. I was looking for some info on the FCC web site and came across this chart:



Just thought that some of y'all might be interested in this info. It's from the 10th Annual CMRS Competition Report, that was published last year. It has a lot of interesting data and maps in the Appendix, like wireless penetration rate by county and CDMA/IDEN/TDMA coverage maps.

 

First of all, we all can see that Verizon's main concern is buying back its 45% from Voda. Now why would they go for another company to make it more expensive to get their 45% back?