AT&T Buys Some Assets From Verizon Wireless
By Bloomberg News
New York Times
Saturday, May 9, 2009
AT&T, the country’s second-biggest wireless phone company,
agreed Friday to pay $2.35 billion in cash to buy assets put up
for auction by Verizon Wireless.
The network assets and mobile licenses are for 79 service
regions in 18 states, mostly rural areas, AT&T said in a
AT&T will be 1.5 million customers closer to closing the service
gap with Verizon. Verizon surpassed AT&T to become the
largest wireless carrier after its acquired the Alltel
Corporation in January.
Verizon’s dominance in more than 20 markets led the Federal
Communications Commission to demand the asset sale.
“It’s a competitor that has the scale to compete with” Verizon,
said Christopher King, an analyst at Stifel Nicolaus & Company
in Baltimore. He
advises investors to buy shares of both companies but does not
Verizon probably would have preferred “someone like a private
equity firm that would just be running it for cash flow,” he
AT&T beat out the equity firms Blackstone Group and Kohlberg
Kravis Roberts, both of which had submitted bids for the assets.
Separately, Verizon agreed to buy five wireless service areas of
the Centennial Communications Corporation from AT&T for $240
million, AT&T said in a statement.
AT&T announced plans to buy Centennial in November. It
said today that the sale of assets to Verizon should resolve
antitrust issues and help it get regulatory approval to acquire
The network AT&T is buying is not compatible with its own, and
AT&T may be forced to replace customers’ handsets eventually,
Mr. King said.
Still, the conversion should be relatively simple and the
subscribers were fairly valued, he said. Carriers are
jockeying for a bigger share of the wireless market as the pool
of new subscribers shrinks.
Phone companies have sold enough wireless devices to cover
almost 90 percent of the American population, according to
wireless industry association CTIA.