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Apparently tired of being the second-largest U.S. wireless carrier, Verizon Wireless is rumored to be working on a deal with Alltel that would vault it way past AT&T and would net it millions of new wireless subscribers.
According to a report on business news channel CNBC, Verizon Wireless is currently in talks to purchase the nation’s fifth-largest wireless carrier, Alltel Wireless, for a total of $27 billion. The report cited only anonymous sources who are “close to the talks,” and Verizon and Alltel are so far refusing to comment publicly about the rumored deal.
But if true, the deal would represent a major coup for Verizon Wireless. After adding Alltel’s 13 million customers to its ranks, Verizon would have the most subscribers in the United States by far, with around 80 million. AT&T, which has mostly held the lead for total wireless subscribers since merging with Cingular back in 2004, currently has an estimated 71 million subscribers.
A wireless carrier based in Little Rock, Ark., Alltel has a network footprint in 34 different states, with most of its coverage concentrated in southeastern, Midwestern and southwestern states. The carrier has received consistently high grades for its call quality, and a recent J.D. Power survey listed Alltel and Verizon as the carriers with the best call quality in the southeastern region of the U.S.
Technologically, the two companies are a good fit for one another since Verizon and Alltel both currently use the Code Division Multiple Access (CDMA) standard to deliver their 3G wireless services, and both plan to eventually switch over to the GSM-based Long Term Evolution (LTE) for their 4G networks.
Alltel has only been a privately held company since last November when the carrier completed its $27.5 billion sale to an affiliate of TPG Capital and GS Capital Partners. The merger agreement had been adopted by Alltel’s shareholders in August, with each shareholder receiving $71.50 per share in cash in compensation.