Verizon agrees to 28-billion-dollar deal for US mobile phone rival
San Francisco - Verizon Wireless is to buy its smaller mobile phone rival Alltel in a deal worth 28.1 billion dollars that will create the largest mobile phone company in the US with more than 80 million customers, Verizon said in a statement Thursday.
The deal comes just seven months after Alltel was bought by a consortium of private equity firms in a 27.5-billion-dollar leverage buyout. But with the credit crisis prompting banks to back away from loans, Verizon moved in to seal a deal that it says will yield synergies valued at 9 billion dollars and allow it to save 1 billion dollars in costs next year.
Under the deal, expected to close by year's end pending regulatory approvals, Verizon Wireless will acquire Alltel's equity for approximately 5.9 billion dollars and assume approximately 22.2 billion dollars in Alltel's debt.
The addition of Alltel's approximately 13.2 million customers to Verizon's 71.4 million users will allow the combined company to leapfrog AT&T to become the largest mobile provider in the US. But the deal is also seen as risky since four out of five US consumers now have cellphones and future growth will come not from new customers but from increasing mobile charges through increased use of the Internet and other data-heavy applications.
The Alltel deal is Verizon's large transaction this year, following its purchase of radio spectrum for more than 9 billion dollars at a government auction. (dpa)