Everybody Wants It, But Who Would Buy Alltel?
The Wall Street Journal helped generate buzz about a possible buyout of Alltel, the fifth largest cellular carrier in the U.S. It seems that its stock is a relative bargain and the company has very little debt. And private equity takeovers of public companies are all the rage right now.
A private equity takeover of Alltel would probably mean practically nothing to its 11 million-or-so mostly-rural subscribers.Â
So why are we talking about it here?
Because when a buyout this big is talked about, competing companies start thinking about whether they should offer their own bids. In this case, both Sprint and Verizon Wireless would be candidates, since they are the bigger service providers, and use the same CDMA technology as Alltel uses to route their calls.Â
So Alltel customers might wind up as customers of Sprint or Verizon, whether they like it or not.
For Verizon Wireless, the biggest obstacle to acquiring Alltel might be the Federal Trade Commission, which might object to already-big Verizon getting much bigger. Verizon would probably have to dump subscribers in some areas where it currently competes with Alltel.
For Sprint, the biggest obstacle to acquiring Alltel is the fact that the company has struggled after it acquired Nextel.Â
For wireless customers generally, there’s a delicate balance between having enough competition to keep prices low, and having your provider be big enough to give you decent nationwide (or worldwide) coverage. Alltel’s existing service and roaming agreements with Verizon Wireless seem to make its subscribers happy.Â
So there are lots of good reasons why Alltel could and should remain independent - even if it does get swallowed up by private equity money.Â
Alltel, Wall Street Journal, Verizon Wireless, Sprint, Nextel
[via Wall Street Journal]
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January 11th, 2007 at 3:43 pm
I hope to god that Alltel stays independant and does not get swallowed up. There is plenty of room for 5 national carriers and having more creates better competition and keeps prices lower for the consumer. Working in the industry I have discovered bigger isn’t always better, much like a bigger government isn’t always better. With less choices out there I could see rate plans steadily going up with no check on them. What would happen eventually is the carriers would get more greedy and although bringing in BILLIONS it would no longer be enough, then sooner or later we would widdle our way down to two carriers GSM vs. CDMA and we all know who the last two standing would be. On a side note I think the FCC should repeal its last decision to allow carriers to own multiple licenses within single markets. That kind of legislation is what is letting the big guys push the little guys out of business.
January 11th, 2007 at 5:29 pm
Given Alltel’s relatively strong position right now, some say Sprint is the more likely candidate to put itself up for sale. Its takeover of Nextel hasn’t gone too well. And the announcement of layoffs is a signal that Sprint/Nextel is going to have to do something differently. Maybe Alltel should buy Sprint?
January 9th, 2009 at 2:45 am
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