By We’d heard that Verizon was interested in purchasing Alltel before… but nothing ever materialized. But after a CNBC article yesterday claimed they were in “deep talks” it only took 24 hours to close the deal. Verizon has officially purchased Alltel (read the full press release at the bottom of this article).
The deal should be complete by years end with the contingency that it meets regulatory approval – $28.1 Billion dollars exchange hands in the deal.
Before the deal, THESE were the top 5 American carriers:
- AT&T: 71.4 million subscribers
- Verizon Wireless: 67.2 million subscribers
- Sprint-Nextel: 52.8 million subscribers
- T-Mobile: 30.8 million subscribers
- Alltel: 13.17 million subscribers
But it will soon be:
- Verizon Wireless: 80.37 million subscribers
- AT&T: 71.4 million subscribers
- Sprint-Nextel: 52.8 million subscribers
- T-Mobile: 30.8 million subscribers
- All remaining under 10 million
Imagine if the rumors of T-Mobile purchasing Sprint actually succeed… you’d have 3 HUGE, MEGA companies with around 70-80 million subscribers each and all the other subscribers would be left in the dust.
So how does this bode for Android and for consumers? Those are two very different questions…
It delivers a pretty irritating blow to Android and Google officials are probably wishing Alltel would have held out a little longer. We already know that Sprint and T-Mobile are founding members of the Open Handset Alliance, so they will undoubtedly embrace Android to some degree. But it is companies like Alltel who stood to gain most from Android.
While other companies such as AT&T and Verizon are worried about protecting their proprietary mobile products, companies like Alltel are looking for a competitive advantage against the big guys. Android would have been A FREE advantage since none of the big boys are likely to offer a phone that is 100% open. Android could have quite literally, saved Alltel.
Having a company like Alltel embrace the full openness of Android might not be crucial, but every bit counts when you’re trying to start a new phenomenon. Whats worse is, Alltel’s 13+ million subscribers fall into the hands of Verizon, who has recently been in fierce disputes with Google and seems to be making moves simply to spite Android.
Why Alltel… Why?
We know that Android enabled handsets are coming later this year. Are your finances hemorrhaging so badly that you couldn’t pass up the deal? Lets face it, the deal couldn’t have financially blown them away – Alltel was purchased less than a year ago for $29 billion, so they’re taking a LOSS on the deal.
I would be EXTREMELY interested to know if Google met with Alltel at all? Did they try to convince them to make things work? Because if I was Google, thats what I would have done. I would have told them to wait for Android, open their sails completely and allow it to be the breathing wind behind them.
And what about consumers? This obviously ensures consumers will have less choice and with more and more wireless companies being bought out, it seems like it won’t be long until only the big guys exist. And then, you’ll be able to complain about your mobile problems but have virtually no asylum with a smaller company.
More consolidation will occur – thats for sure. And Android is opening the door to consumers, allowing choice regardless of carrier. Isn’t that part of Android’s purpose or result to begin with? Tearing down the walled gardens of mobile carriers and the limited services they provide for consumers? I believe so…
Android in many ways remedies the very problem this purchase of Alltel could impose. But had it gone to AT&T or Sprint or any other company, it would have posed less of a threat.
And we don’t mean to say “threat” as in Verizon Wireless is bad because, the author of this article is long-time, faithful and loyal Verizon Wireless customer who loves the network and the service. But, we know they have been on shaky ground with Google… and the relationship of VZW with GOOG is one of the biggest mystery as Android pushes forward.
So what do you think – will this purchase have a positive or negative effect on mobile consumers?
Here is the full press release:
June 5, 2008
VERIZON WIRELESS TO ACQUIRE ALLTEL; WILL EXPAND NATION’S MOST RELIABLE WIRELESS NETWORK
Verizon Wireless has entered into an agreement with Alltel Corporation and Atlantis Holdings LLC, an affiliate of private investment firm TPG Capital and GS Capital Partners, to acquire Alltel Corporation in a cash merger. Verizon Wireless is a joint venture of Verizon Communications (NYSE: VZ) and Vodafone (NYSE and LSE: VOD).
Under the terms of the agreement, Verizon Wireless will acquire the equity of Alltel for approximately $5.9 billion. Based on Alltel’s projected net debt at closing of $22.2 billion, the aggregate value of the transaction is $28.1 billion.
The parties are targeting completion of the merger by the end of the year, subject to obtaining regulatory approvals.
Once this transaction closes, customers of both companies will have access to an expanded range of products and services, including a premier lineup of basic and advanced devices and an expanded IN Network calling community. Alltel customers also will benefit from advanced services including over-the-air downloadable music from a three-million-song library, and a network that is nationwide, for a uniform coast-to-coast experience. They also will be able to take advantage of industry-leading consumer policies, including Test Drive and Worry Free Guarantee®.
“This move will create an enhanced platform of network coverage, spectrum and customer care to better serve the growing needs of both Alltel and Verizon Wireless customers for reliable basic and advanced broadband wireless services,” said Lowell McAdam, Verizon Wireless president and chief executive officer.
Alltel serves more than 13 million customers in markets in 34 states. This includes 57 primarily rural markets that Verizon Wireless does not serve. The transaction puts the Alltel markets and customers on a path to advanced 4th generation services as Verizon Wireless deploys LTE technology throughout its network over the next several years. Alltel’s customers also will reap the benefits of Verizon Wireless’ Open Development initiative, which welcomes third-party devices and services to use the Verizon Wireless network.
Verizon Communications, the owner of the majority stake in Verizon Wireless, expects that the transaction will be immediately accretive, excluding transaction and integration costs. “This is a perfect fit, with Alltel’s high-value post-paid customer base, its solid financials, our common network technology, and significant, readily attainable synergies,” said Ivan Seidenberg, Verizon chief executive officer and chairman of the Verizon board. “Verizon Wireless’ acquisition of Alltel clearly provides opportunities for enhanced value for Verizon shareholders.”
Alltel President and Chief Executive Officer Scott Ford will continue in his current position as head of Alltel until the merger is completed.
“Both Alltel and Verizon Wireless have long track records of delivering a high-quality customer experience in the marketplace,” Ford said. “The combination of our two companies will continue and improve upon that heritage as, together, we can more quickly deliver an expanded range of innovative products and services to our customers.”
Verizon Wireless expects to realize synergies with a net present value, after integration costs, of more than $9 billion driven by reduced capital and operating expense savings. Synergies are expected to generate incremental cost savings of $1 billion in the second year after closing.
Alltel and Verizon Wireless both use a common network technology, which provides advantages of a seamless transition for Alltel customers, ease in integrating the two companies’ networks, and scale efficiencies in operating the larger integrated network.
Morgan Stanley acted as financial advisor to Verizon Wireless on this transaction and is providing bridge financing. Debevoise & Plimpton LLP acted as legal advisor to Verizon Wireless.
Citibank, Goldman Sachs and RBS advised the sellers on the transaction. Wachtell, Lipton, Rosen & Katz acted as legal advisor to Alltel, and Cleary Gottlieb Steen & Hamilton LLP and Ropes & Gray LLP acted as legal advisors to the sellers.
Better change that to:
“But it will soon be:
* Verizon Wireless: 80.37 million subscribers – 1”
Because I will be finding a new service provider as soon as my contract is up. I was with Verizon for 2 weeks, the lies they told me to get me to sign up for their service and their lack of decent customer support people made me vow not to EVER patronize them again. Then I found Alltel. They treated me like a valued customer from day 1. When I had questions, they answered them openly and honestly and genuinely tried to help me get exactly what I wanted out of my cell phone plan and I rewarded this service by getting my family and some friends to switch to Alltel and by staying with them for the past 5 years. I fear those days are now over… I’ll be taking my business elsewhere and encouraging everyone I know who has Alltel to do the same.
Sorry to hear that. I jumped between a bunch of carriers until I went with Verizon and I’ve been a happy customer for a decade. A lot of times, I think it depends on where you live. I’ve had a great experience.
In addition, the poor service of one employee can make an entire company seem like crap. I have vowed never to go to Austin Grill again after our waiter took 15 minutes to give us menus, 15 more minutes to take our orders 15 minutes to tell us what I ordered wasn’t available and then after switching my order he came back 15 minutes later and told us he forgot to put our orders in and he apologized.
1 guy makes the whole company look bad. Is it fair? Probably not. Do I understand it? Absolutely… I will not go back to Austin Grill regardless.
But its been 5 years… maybe giving them a 2nd shot won’t hurt.
In my opinion, I’d just wait until the 1st Android Phone comes out and snag it. But, I guess if your current contract expires before then it leaves you in a bind.
Anyways, goodluck!
I work for alltel and feel that this is not a good move for the company and have expressed my opion.
I can’t agree with the dicsssions that where made. Before I came to work witrh alltel I was a verzion wirless customer and left them with a bad taste. Due to customer service issues and they way they run thier stores hopefully they will see that alltel process is the better way to run a company and not force their rules and policys on current alltel customers and do away with services like my circle and any time rate plan changes which gives the customer the freedom of choice.
Where is the little people’s voice in this I hope that the federal goverment will not allow it to happen.
Nathan: many people have suggested that Verizon Wireless is buying Alltel exactly for the reasons you mention… so they can adopt the corporate policy that has made Alltel so popular among its customer base.
I don’t think the government will get in the way of this one. There are 3 other HUGE wireless providers and a bunch of smaller ones. Still, it seems like we move closer and closer to that “line” of “monopoly” with each purpose. They’ll have to draw the line somewhere… eventually… but that time isn’t now and I’m not sure its in the near future, either.
I have been a very satisfied Alltel customer for the past six years. I don’t know of any other company with such EXCELLENCE in customer service. My son told me about this story yesterday and I couldn’t believe it. Hopefully, Verizon will realize Alltel’s customer service works better than theirs and will do the smart thing and keep it in place as well as replacing it with theirs.
I was with Celluar One for years then Alltel bought them out, now Verizpne is buying out Alltell… SO I guess I will go along for the ride unless they change my plan and charge me more,,,, Are we looking at the old Ma Bell’s of the past were one company controlled every thing? Will Verizone be this company? who knows…. could be smooth sailing,,,,or rough waters ahead
Almost all the posts seem to be about current quality of service issues between Vz and X. So what does the consolidation mean for Android? Well, if Android devices have the “iPhone factor” then i think the new Vz will be tempted to try a more open approach to premium data services. I imagine they do not like AT&T growing share because of the iPhone.
The business decision by Vz is how will they make more money with an open platform?
I have sent E-mails, made phone calls and stopped into Both the Verizon AND Alltel stores trying to find answers to important questions. I’ve even sent a request to Lowell McAdam the president of Verizon asking him for a reply; he has not responded to my questions. My wife has had Alltel for 10 years; their number of local minutes was great for her and I have had Verizon for over 11 years their larger area was better for me. In May 2008 she and I swithched to Alltel for two very simple reasons: 1.) The Circle Plan, we have 10, so we can call and get calls from anyone in our listed “Circle” at no charge at anytime- hepls a lot. 2.) We also have 1,000 text messages for each of our phone, either in bound or out bound. We have 1,000 anytime minutes to “share”, for $80 per month before tax and not including phone insurance. Well “NO ONE ” at Verizon, including their president Lowell McAdam will NOT answer my questions and neither will anyone at Alltel. My questions are: since I just signed a “contract” with Alltel for a minimum of 2 years. So if Alltel is NOT going bankrupt and is just selling by choice and no one will tell me if my contract will be honor I feel that ANY Alltel customer should be able to “SUE ” Alltel for breach of contrantract, just like they would come after us if we dropped THEM too early, including phone equipment purchases! You have to use some commmon sense that Verizon knew full well what they were going to do with the Alltel contracts before they bought Alltel, and NOT telling us is not trustworthy!! So is THIS how Verizon plans to treat it’s new customers from Alltel? You KNOW the Verizon company already knows if they are going to honor the Alltel Circle plan and provide the “included” 1,000 text messages. By not answering I’ll bet the answer is NO sorry about your LUCK, but hey welcome to Verizon we really “VALUE” you as a customer! Yeah right, so much so that they can but will NOT answer questions they already know the answers to!
Thanks…for NOTHING!!!!
AS for Lowell McAdam the “president” of Verizon; I wouldn’t trust that guy to tell the TRUTH to ANYONE about ANYTHING for as long as..FOREVER!!!
My opinion is stay away from Verizon, if you are an Alltel customer, SUE them for breach of contract on their end and go with some other wireless phone company.
I myself am outraged by this. I have only been a customer of alltel for a year and a half but still their service has been wonderful compared to others. I have never liked Verzion’s service. They are way over priced and do not have the same great service as Alltel. It shows what people will do when money is “throwed” in their face. This upsets me greatly and i can promise that i will change services as soon as my contract is over.
I have been with Verizon for the past 5 years and I have always (call me lucky) had GREAT customer service and never had any issues with the coverage or the quality of service. The only one issue I have had is the pricing of phones and the disadvantage of having to sign a new contract for a decent, well rounded price for a phone but honestly that is really any company you go with. I think this buy out is all just any companies way to expand and make more money because what it all really boils down to is that all mighty dollar!
my fiance and I have been verizon customers for about 9 months now and have been previouse alltel customers as well niether company has satisfied us completely whether it bad customer service,bad services,or overpriced plans. we have complained to both companies about bad services etc. and thats the best you can do hoping that they will take your comments and change to better their customers. telling people to stay away from either just because you had a bad experience with them doesnt mean that it will happen to the next one because really if you thought they were bad then why are you stooping to their level. the appriate thing to do is encourage other customers to talk to someone in charge about their dissatisfaction of the service. that would surely get their attention to change their services and policies. otherwise you’re just bad mouthing companies. here’s the big picture whose to say that when all this takes place that verizon won’t be a better service maybe they are changing and adopting new services and plans. give them a chance you might be missing out on the better deal. have a nice day
THIS GOES OUT TO ALL EMPLOYEES FOR BOTH ALLTELL AND VERIZON……GET OUT WHILE YOU CAN …..
AS A EMPLOYEE OF ATT I KNOW WHAT MERGERS ARE ALL ABOUT! CINGULAR TO BUY ATT, THEN SBC TO BUY ATT AND SBC TO BUY BELLSOUTH AND THEN THE NEW ATT TO BUY DOBSON COMMUNICATIONS ….AND JUST TO LET YOU KNOW EVERYTIME WE BOUGHT ANOTHER COMPANY ARE COMMISSION CHECK GOT LOWER AND LOWER……THESE COMPANIES WILL LOWER COMMISSION PAYOUTS ..SO YOU DONT FEEL LIKE YOU WOULD WANT TO SELL…..ITS BULL…..CORPORATE WORLD SUCKS ………THEY DONT REMEMBER WHO MADE THESE COMPANIES…..WITHOUT US (SALES CONSULTANTS) THESE COMPANIES WOULD NOT EXIST……………….TRUST ME!!!
WELL WHEN i LiVED iN CALiFORNiA i HAD VERiZON. THEY WERE THE ABSOLUTE BEST COMPANY i WAS A PART OF. i USED VERiZON, TMOBiLE, CiNGULAR, & METRO PCS. VERiZON STiLL WON. NOW i MOVED TO A LiTTLE TOWN WHERE MY ONLY OPTiONS WERE ALLTEL & SPRiNT. i JOiNED ALLTEL. LET ME TELL YOU, NOT PLEASED. i HAVE SO MANY TiMES FRiENDS & FAMiLY CALL & MY PHONE DOESNT RiNG. i GO 30 MiNUTES AWAY FROM MY HOUSE & i ALREADY START TO ROAM. VERiZON i BELiEVE WiLL BE THE BEST THiNG THAT CAN HAPPEN TO ALLTEL. BUT THAT’S JUST MY OPiNiON.
Currently a displeased ATT customer, I have been planning to switch to Alltel when my contract is up. Then I hear about the Verizon buy out and I think about the massive network they’re amassing and thought that would be a pretty cool coverage wise. One thing the Alltel guy did tell me, (and their customer serice has already impressed me), is that as long as I start a new contract with them prior to the buyout which from what I understand is at the first of the year, there would be no changes to my contract other than the wider network so If I do decide to go with Alltel I hope the only change will be the network. It sounds like I might be making a mistake.
I was a verizone customer for many years and was happy with my service, with a few exceptions but they were resolved. I moved to a rual area where my verizone service for a pda smartphone was not great, after about 6 different pda phones verizone let me out of my contract. I went with Alltel and because of there rual area coverage I have not had any problems with my service, I do miss some of the advanced phone technology but they work. I hope we will get the best of both worlds with this merger (time will tell) I have talked to both verizone & Alltel about what to expect both give me differant ansewers wither to start a new contract or not with alltel, if I buy a new phone will it work with verizone service or not alltel says yes verizone says no. that my only concern at this time.
I had alltel for about 2 years and loved it 1000 min for 49.99 a month unlimited text messages… but then i moved to a big city and they didn’t have alltel so i switched to Verizon and from the very beginning i hated it. 59$ a month for 900 min and then a 5$ charge for 250 text. if you change your number you have to pay money, if your phone breaks you have to pay money, they keep adding on charges every chance they get. Now I have moved back to my Rural town and want Alltel back but no. Verizon bought them out.
verizon wont negotiate with android because all they care about is making money. for instance on the android G1 for the android market, everything is free. verizon would never allow that. now, i am a verizon wireless and i spoke with a verizon representative recently and everything he said was complete bull. we spoke about why verizon bought alltel and other topics about verizon and all of his reasons were bull. the main thing is now that verizon is on top, they’re going to be even more all about making money.