By James T. Hammond
Published Jan. 22, 2013
AT&T has agreed to buy the assets of the Alltel wireless system, a transaction Alltel officials said would give Alltel customers access to a nationwide system and expand AT&T’s reach into Alltel’s mostly rural territories in six states, including South Carolina.
Michael T. Prior, CEO of Allied Wireless Communications Corp., the company that operates Alltel, said the wireless environment has evolved and it was increasingly clear to his team that it was time to sell the Alltel system.
“The rural nature of the Alltel network was increasingly difficult to operate,” Prior said. “Alltel is best suited to be part of a national network like AT&T.”
Prior did not provide a breakout of Alltel assets or customers in South Carolina in a conference call about the transaction. But an online map of Alltel’s service area shows a broad swath of rural South Carolina, where AT&T’s system is less robust than some of its competitors.
Allied, based in Little Rock, Ark., serves about 585,000 customers in rural areas of six states — Georgia, North Carolina, South Carolina, Illinois, Ohio and Idaho.
Also part of the appeal of the sale to Allied Wireless was the opportunity to make a substantial profit. Allied Wireless paid $200 million for the Alltel assets it purchased from Verizon Wireless in 2009. And the company has invested another $85 million in the Alltel system since the purchase.
Today, Allied Wireless said AT&T has agreed to pay $780 million for Alltel’s assets.
Prior said Allied Wireless retains ownership of the Alltel brand. He would not say whether the brand will disappear, saying instead that Allied Wireless would “have something to say later about the brand.”
AT&T said it will acquire wireless properties, including licenses, network assets and retail stores in addition to Alltel’s 585,000 subscribers. AT&T noted that the territories served by Alltel are home to 4.6 million people, or potential new customers.
The acquisition includes spectrum in the 700 MHz, 850 MHz and 1900 MHz bands and is largely complementary to AT&T’s existing network.
Alltel had about $350 million in revenue in the first three quarters of 2012.
“We believe this is a very good transaction for our customers and our stockholders,” Prior said.
“As part of AT&T, Alltel customers will benefit from a more seamless system of connections nationwide,” Prior said. “In addition, the transaction will improve the experience for existing AT&T customers in these Alltel markets.”
The transaction is subject to customary closing terms and conditions as well as regulatory approval from the Department of Justice and the Federal Communications Commission. The companies expect to complete the transaction in the second half of 2013.
“Alltel’s customers will benefit from access to a nationwide 4G network, a larger device selection, additional retail locations and a broader range of product offerings,” Prior said. “Additionally, many of our employees should benefit from new career opportunities within AT&T. We will work closely with AT&T to close the transaction and to ensure a smooth transition for our customers and employees.”