Verizon to acquire Alltel for $27 billion?

Reports have surfaced from CNBC that Verizon is in talks to buyout rival carrier Alltel for $27 billion USD, an almost 8x premium over its current pre-interest, pre-tax earnings. The deal would be considered a friendly takeover as Goldman Sachs is in charge of the acquisition.

The reports say that allegedly there was an auction in the spring of last year for the company but that the value was too high. They now see the company's up front value as low enough to be acquired.

The deal should have its fair share of benefits for the acquiring company however. Alltel's service areas overlap Verizon's and Alltel even has a roaming deal with Verizon to allow Alltel customers to borrow Verizon airspace when there is none of their own. Buying out would help reduce competition and increase subscriber totals substantially.

Neither Alltel or Verizon had comments on the speculation. Currently, AT&T has the largest customer base in the US, but this deal could narrow that gap substantially for Verizon.

Written by: Andre Yoskowitz @ 4 Jun 2008 19:47

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6 comments

iluvendo

Not a good thing. Now, even less competition.

4.6.2008 20:19 #1

H0bbes

IMHO Alltel sucks, but iluvendo's correct. Any removal of competition is bad for a lot of reasons- price hikes being my first thought.

4.6.2008 22:03 #2

Blackjax

It's also bad for those who make their living working for these companies. There are jobs losses no matter what is said by the CEO's and ultimately ,yes, less competition and higher prices for us all. But hey there will be golden chutes for some so all is not lost!

5.6.2008 00:05 #3

lynchGOP

Ehhh..........I know you said "IMHO Alltel sucks" but we all have had bad cellular experiences and I can say with experience and some certainty that Alltel does not suck. Overall they're just like all other providers in that they screw and screw up constantly but they're service is higher quality than Tmobile's and they're customer service is better than Verizon's.

I totally agree with both of you...................CAN WE ALL SAY "ANTITRUST" and "MONOPOLY". Government needs to step in on this one. No one person, or even a group for that matter can stop this.

5.6.2008 16:51 #4

SProdigy

All of you are kidding about "competition" right? You do realize, that the largest land line companies own the cell towers, and jack up the prices sky high, since their old business model is dying. At least with home and cell phones, I can choose which company/brand to go with, unlike cable tv, where there is one local provider, and your only outside option is to get a dish: now that's a monopoly that needs to be looked at.

5.6.2008 17:21 #5

locobrown

This is real bad in many aspects. With a lesser number of competitors cellular plans and phones will be sold at inflated prices above its real value proving services at a much higher cost. Initially providing services at an affordable price then gradually increasing its service plans, just like directv has done for example. Directv has been increasing its satellite service fees because they claim that new channels have been introduced or converted into HD channels and many are paying a variant price that increases frequently for channels they don�t have nor can�t view because they are not included in the premium package. Dish Network are only fumes compared to directv and still many still prefer directv even though its prices are constantly increasing, there is no competition. What the providers are going to later say: �Everybody needs a cellular phone. If you don�t like it you need to deal with it and accept it. There is nothing you can do because your business depends on having a cellular network�. This maybe a little bit exaggerated but you get the picture, just consider the Sirius and XM satellite radio merger, It can actually get to that point in which only one stands alone by acquiring those who struggle during a specific time frame.

5.6.2008 20:52 #6

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