Verizon buys fifth biggest US network


Verizon Wireless, a joint venture between Verizon Communications and Vodafone, has agreed to acquire Alltel for $28.1 billion (£14.3bn) in cash and assumed debt.
Arkansas-based Alltel is joint-owned by TPG Capital, formerly the Texas Pacific Group, and the private equity division of Goldman Sachs.
It was bought with debt funding from banks Citigroup, Barclays and the Royal Bank of Scotland just last year for $27 billion.
Alltel is the fifth largest mobile operator in the US, with over 13 million customers across 34 states.
The deal, which includes $22.2 billion in debt, makes Verizon Wireless the number one network operator in the US with 80 million customers and revenues of $52.7 billion. It leapfrogs AT&T. Deutsche Telekom’s T-Mobile follows in third.
Vodafone owns a 45 per cent stake in Verizon Wireless. Its share goes undiluted by the purchase. The remainder is owned by Verizon Communications.
Vodafone chief executive Arun Sarin said:
“We expect the acquisition of Alltel to significantly increase the value of our 45 per cent interest in Verizon Wireless through the realisation of substantial in-market synergies and to reinforce its leading position in the world’s largest mobile market by revenues.
“Whilst Verizon Wireless’ free cash flows will initially be deployed in reducing net debt, the Verizon Wireless board has agreed to conduct an annual dividend review process and to the payment of enhanced tax distributions.”
Neither Vodafone nor Verizon is contributing any equity to fund the transaction.
The transaction remains subject to customary regulatory approvals and is targeted to complete by the end of 2008.