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Verizon Sticks With Bid to Buy Alltel

Discussion in 'Wireless News' started by ComicalMoodyDan, Oct 21, 2008.

  1. ComicalMoodyDan

    ComicalMoodyDan Gold Senior Member
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    Verizon Sticks With Bid to Buy Alltel
    CEO Says Credit Crisis Won't Derail Acquisition of Debt-Laden Wireless Firm

    Verizon Wireless says it intends to follow through with its pending acquisition of Alltel Corp. despite tough credit-market conditions, but Wall Street is showing some signs of jitters that the deal won't close.

    The carrier, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, announced in June it would buy Little Rock, Ark.-based Alltel in a deal valued at $28.1 billion. That included taking on $22.2 billion in debt mostly tied to Alltel's leveraged buyout last year by a pair of private-equity firms.

    Verizon's plan was to issue new debt to repay Alltel's term loans, but in the current market it faces higher interest rates than it anticipated.

    That has led to some speculation on Wall Street that Verizon may try to back out. Alltel's term loans are trading at about 91 cents on the dollar, according to Reuters Loan Pricing Corp. If investors were confident of a Verizon deal, the debt would be trading closer to par, analysts say. The cost of credit-default swap contracts -- insurance against an Alltel default -- has more than doubled in the last month, though the cost is significantly less than before the Verizon acquisition was announced.

    But Verizon says it is continuing to push forward with the acquisition and is in the final stages of regulatory approval. The Federal Communications Commission is scheduled to vote on the merger as soon as Nov. 4.

    Verizon's challenge will be to arrange financing that isn't too costly. In a brief interview last week, Verizon Chairman and Chief Executive Ivan Seidenberg said he expects interest rates to come down, but higher-than-anticipated borrowing costs won't derail the Alltel deal.

    "This is an asset that's going to be valuable to us for 20 or 30 years," Mr. Seidenberg said. By acquiring Alltel, which has more than 13 million customers, Verizon would vault to No.1 among U.S. wireless carriers with about 82 million subscribers.

    An Alltel spokesman declined to comment.

    Other parties involved in the deal have strong incentives to complete it. Alltel's private-equity owners, TPG Capital and GS Capital Partners, a unit of Goldman Sachs Group Inc., are eager to exit the investment, which will net them a profit of roughly $1.3 billion.

    The banks that funded Alltel's buyout -- including Barclays PLC, Citigroup Inc., Royal Bank of Scotland Group PLC and Goldman -- will be able to cut potential losses.

    "Everyone has an incentive to make this work," Mr. Seidenberg said.

    Mr. Seidenberg declined to say whether Verizon will try to renegotiate a lower deal price with Alltel's owners and the banks. People close to the deal said they believed no such discussions are under way now. Those people said it would be difficult under the parties' strict contract for Verizon to alter deal terms or back out entirely.

    Verizon Sticks With Bid to Buy Alltel - WSJ.com
     
    #1 ComicalMoodyDan, Oct 21, 2008
  2. cade2000

    cade2000 New Member

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    I've known about this piece of news for a little while now, and I think it has a good chance of moving forward. Yeah, wall street is terrible and i know I've suffered, but Vodafone's conjunction with Verizon is what makes it a valuable assett. I used to have Vodafone overseas and they are huge. But man, with everyone buying everyone else out!!! T-mobile buying out Suncom, Att with Cingular, Sprint with Nextel, now this? and Alltel is no little nor young company! I wont be surprised if one day we're just going to have One wireless carrier! Watch, Google is taking over all sectors of technology slowly, they'll buy everyone out. (good thing for monopoly laws).
     
    #2 cade2000, Oct 21, 2008
  3. WirelessBeachBum

    WirelessBeachBum Soylent Green is People
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    Wirelessly posted (Opera Mini on Alltel HTC 6800: Opera/9.50 (J2ME/MIDP; Opera Mini/4.1.11355/408; U; en))

    Not sure which vote I'm more concerned about on November 4th.... fcc vote on Alltel or Presidential election....

    Being absorbed by the company I used to call "the borg" is not that exciting.... not sure if it wouldn't be better to be divested to US Cellular... they will be the new fifth largest carrier.
     
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    #3 WirelessBeachBum, Oct 22, 2008
  4. KyleAndMelissa22

    KyleAndMelissa22 Woot Woot, Splat !!!
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    Well I hope there are little or no divestitures.

    ...

    Lets see the divests of the other companies:

    T-Mobile / SunCom - No divestitures (overlap in Savannah & Augusta).

    Sprint / Nextel - No divestitures

    AT&T / Cingular - some divestitures, but they have both 800 licenses in some markets,
    and many other markets have both 800 & 1900.

    ...

    So For Verizon / Alltel, hopefully they could become like a Sprint / Nextel kind of thing without divesting. :)
     
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    #4 KyleAndMelissa22, Oct 22, 2008
  5. WirelessBeachBum

    WirelessBeachBum Soylent Green is People
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    I believe VZW has alreay offered up about 100 markets to divest, in my area Brunswick, GA, Anderson, SC (which includes Greenville, which at one point was the most penetrated market in the US.) and Aiken, SC....

    Since they are looking to add subscribers it's going to be interesting to see which side they divest in Brunswick, because I believe Alltel has higher penetration in that market.
     
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    #5 WirelessBeachBum, Oct 22, 2008
  6. blsemp

    blsemp Senior Member
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    I thought Greenville SC was not included. I am still hoping for Alltel's 850.
    :D:D
     

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    #6 blsemp, Oct 22, 2008
  7. Gamer03

    Gamer03 Technology Aficionado
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    Well I hope the merger is approved and goes through and completes the final stages. Verizon is 1900 only by me while Alltel is 800. There is an Alltel tower that is .25 miles SE of my house and I would like to see Verizon utilize this if the merger goes through. If it does, then down the road (since mergers usually take a few years to finish and finalize [tower integration, etc]) we would have the ability to consider Verizon again since we would have a full signal at our house.
     
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    #7 Gamer03, Oct 22, 2008
  8. QLR

    QLR RIP Note!
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    You're not the only one who wants the merger to be approve! Verizon is great here despite being PCS only, but I want more EVDO availability throughout the panhandle!
     
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    #8 QLR, Oct 23, 2008
  9. Simon5282

    Simon5282 Senior Member
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    Well, I think that blocking big mergers and breaking monopoly's, duopoly's,or even a few big companies who price fixate; are one of the very few, if not only regulatory practices that the government should be allowed to do. I am not sure if the wireless carries fall into this category yet. As far as the Verizon/Alltel merger, I am not sure if it would be good or bad. We have both in my area and being a GSM fanboy, I am indifferent right now. Now maybe down the road it might drive up prices though. I am not sure.
     
    #9 Simon5282, Oct 27, 2008
  10. Joe912

    Joe912 New Member

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    I hope the merger goes through and that Verizon keeps their customers in my area. My market Montgomery County is listed for divestiture. I know back when Cingular and At&t combined in Vidalia they were able to keep their 1900 & 800 mhz. It was kinda weird here because Cingular was already here as a PCS provider. US Cellular sold the A market to At&t then when Cingular & At&t merged they kept all the towers and customers. It's kinda bad when your town is in two diffrent Cellular Markets. :( Right now Vidalia has T-mobile, Sprint, Alltel, Cricket, Southern Link & Cingular on the Toombs side. On the (Montgomery Co) side we have T-mobile, Verizon, Alltel, Cricket, Southern Link & Cingular.
     
    #10 Joe912, Oct 27, 2008
  11. KyleAndMelissa22

    KyleAndMelissa22 Woot Woot, Splat !!!
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    In my area, Verizon would be better off divesting their home network (800 "A" Side),
    and migrate them over to the "B" side, then Verizon would have a statewide 800 license.

    Verizon does not have a statewide license in SC,
    US Cellular is in parts of the Pee Dee instead.

    Only Alltel has a statewide 800 license in all 46 SC Counties.

    So if they merge and have to divest, it would be more wise to give up their current network,
    and move their customers to the Alltel side. ;)
     
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    #11 KyleAndMelissa22, Oct 27, 2008
  12. MasterChief

    MasterChief New Member

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    I'm interested to see how this will unfold... :)
     
    #12 MasterChief, Oct 27, 2008
  13. M in LA

    M in LA Mobile 28 Years Plus
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    I agree with you Kyle. I have a feeling this is what they'll do in any are they have to divest. Keep the stronger of the two networks even if it's not Verizon's own native network.
     
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    #13 M in LA, Oct 29, 2008
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