Verizon wants to buy Alltel, create incestuous major carrier
What would you do with $27 billion? If your name is Verizon Wireless, it seems the answer is acquire rival Alltel. According to CNBC Verizon is “deep in talks” to acquire Alltel. The price currently being batted around is $27 billion, which is about equal to the GDP of Latvia. Alltel was recently purchased for $27.5 billion by private investment firms TPG and Goldman Sachs, and two sales in under 12 months is not a great sign. That said, given the current economic downward spiral it’s not the worst bidding price Alltel could have commanded. While there’s no word on exactly when this transaction might be finalized, we all know what “deep in talks” means, right?
yeah id like to se sombody buy out sprint
the after math iin itself would gbe interesting
Great, just great, now we’ll have Verizatell.
I just want to start my own GSM carrier, because a merger of two crappy CDMA giants is hard to stand.
Wow. I am really disappointed with you BGR.
Wasn’t it just the other day you jumped on a certain dude with ‘intimate’ knowledge for giving investment advice but now your qualified to give opinions on alleged M&A talks?
BTW, they are paying less than the Private Equity consortium did just a few months ago even though EBITDA has increased substantially (most acquisitions are a based on a EV:EBITDA multiple). So total EV is being valued at a lower absolute value while EBITDA has increased – higher numerator and lower denominator means a lot better price.
And because the company is being shopped around twice in a year doesn’t mean it is a bad investment, it’s just a confirmation that financiers have to convert some of their investments to cash to raise their Tier 1.
How about you stick to telling me about Tech and tech related rumours and we’ll leave corporate finance to the iBankers.
If Alltell is a lot better financially set, why can VZ afford to pay out huge dividends every quarter? If Alltell is a lot better financially set, why are they always on the market to get bought. Sprint can’t buy Alltell in their wildest dreams right now. They can’t afford it. Didn’t they report greater losses than what they were worth a couple quarters ago? VZW would only have to give up equipment in the double coverage areas, not the customers, and only if there isn’t another carrier in the area. No wonder Alltell is going under, even their employees are idiots and misinformed.
At least both carriers use cdma. Look how bad that Sprint/Nextel merger has gone. One company, two networks. It’s nuts. We’ll eventually get down to three major carriers.
Well, let’s just see here. First of all, it’s Alltel. Second it’s not that Verizon can or cannot afford to pay out huge dividends, it is that they must as a major wireless provider. And if you knew anything about acquisitions, you would know that there are two types of companies that are bought out in the marketplace. The first are ones that are under-performing in which a shake-up in management would yield huge profits, i.e. Yahoo. The second is a company that is making huge strides and becoming a major major player in the market. Alltel fits the bill. Buying out Alltel know is like hitting the jackpot. Also, being bought out is not going under. Especially not for that price.
There are too many people with superiority complexes about thier carrier or knowledge of carriers. It is silly of thier opinion or opinion of facts
Bought 4 25.1 billion. By Chad
That picture is hilarious. Absolutely hilarious.
@ Nick,
If no one were to buy Alltel now, what would happen to the company? The answer is, with all of the debt they have aquired (roughly 20 billion), they would go under!
The part about VZ paying out huge dividends was to stress the point that VZ has the money to do so. They are not required to pay any dividends, no company is.
This whole CDMA vs. GSM argument is retarted. It’s a moot point. Yes, CDMA is superior to TDMA–what the OLD 2G GSM was based on. However, 3G GSM is based on WCDMA/UMTS/HSPA, which is superior to “3G” CDMA2000/EVDO. That said, Verizon currently has a MUCH larger “3G” network vs. AT&T.
All of the carriers are now evaluating 4G technology. Verizon and AT&T have both made commitments to “LTE”, which right now is a draft standard that the GSM Association will adopt as the “official” global standard for 4G.
Essentially, this means Verizon will probably be building a 4G GSM network with the C-band spectrum they recently won at auction. AT&T will be doing the same. Sprint has committed to WiMAX, but there is a lot of industry pressure to merge LTE and WiMax. If this happens, device interoperability should theoretically be possible.
Bottom line, it looks like America might finally be on the path to follow global standards for 4G. While we may see more consolidation and fewer carrier choices for consumers, eventually they may win out with better portability between carriers.
Debt really isn’t an issue. If you would look at the debt load that all major wireless carriers currently have then you should see that there is a pattern there. It is just the way that the industry is built. Billions of that debt is paid down every year. More is just tacked on with acquisitions and anything of the sort. It is somewhat like revolving debt. A never-ending loan of sorts.
Also, I understand that Verizon isn’t legally required to pay a huge dividend. However, in the telecom industry, it is standard practice to pay out large dividends because it is a highly profitable opportunity. If one company was not paying large dividends(Sprint), then there would be adverse effects. Paying large dividends keeps quality stockholders around. Otherwise, they would purchase stock elsewhere in the industry.
As for the buyout/merger. I am all for it. I am an Alltel customer(no problems with the company whatsoever) that places a significant amount of my calls to persons within the Verizon network. Being bought out would save on airtime charges.
You are right. Business debt is completely different from personal debt. It’s beneficial to finance with bonds (debt) since you don’t have to deal with shareholder rights, common stock value isn’t diluted and the interest is tax deductable.
Yes but the debt load that most other companies have, was expected financially. Their debt was planned so to speak, budgeted. From what I understand, Alltel acquired the debt when GS bought them. GS acquired them and shifted some of their debt over to them, and is now selling them off. Now Alltel has debt that wasn’t planned. Hey Nick, I hope I didn’t come off as arguing with you. I first made the point about arguing about GSM vs CDMA being pointless, and then it tumbled from there. Take care.
Yeah, not a problem. I totally see your point with CDMA and GSM. And you are right, GS did give them some grief with that debt. The only thing is that GS wasn’t able to pass on that debt b/c it wasn’t Alltel’s debt. It was just a part of GS’s debt that accrued while holding onto Alltel. That’s just the way it has worked with the down market and the debt situation with big lenders.
How is CDMA crappy? its a lot faster and has more capacity per tower. only downside doesnt work in most countries overseas. but verizon has phones that are CDMA and GSM capable.
its official, Verizon Comm has acquired Alltel for 28 billion. This move makes VZW the largest carrier in the US with now nearly 80 million customers.
Does it mean they got laid at their family reunion too?…twice? Cause that shit’s happened before, turned out to be my sister. How fucked was I at breakfast the next day?
Naw I’m just fucking wit ya all.
Drew-
You should try looking at the licensed service area maps- then you will see the big gains that Verizon is making with this acquisition. Also, for those of you bitching about consumer choice, it is CONSUMER DEMAND that is driving this. What does everyone always complain about when it comes to wireless- “my phone works here and not there”. Providing NATIONWIDE wireless service takes a BIG company to do this. If you want someone to blame for the so-called lack of competition- blame the FCC. They are the reason that your choices for telecom and broadband internet really suck and with the more regulation they slap on wireless, they will turn that industry into the same thing.
@ Drew:
Oops, you have some egg on your face. *hands you a towel* I’m really going to miss those Alltel commercials.
As a general comment: while GSM may be good, AT&T hasn’t expanded their network to all the rural areas (at least not here in VA). It’s basically confined to major highways and roads in the south of the state.
Oh well. No iPhone for me, yet.
It’s kind of like waiting for Verizon FiOS. By the time it gets close to our dinky little town 15 years from now, the NEXT BIG THING will already be out. They’ll stop expanding the fiber network and we’ll never see it. (That’s what happened with DSL.)
first of all some of the people up here are just complete idiots and have no idea what they are talking about. second this buy out will cause allegedly 60 billion of debt for vzw. 22 bill of that being alltels assumed debt load another 6 bill for the actual co. and etc. now alltel has 13 million cust and 22 billion in debt. vzw has 67 million cust and approximately 32 billion in debt some of that being what was paid for the 700 mhz spectrum, some being what is to be paid for rural wireless-unicel and other business ventures if you smart enough do the math. dont let the fact of your embarassment that your co. is being bought out or the fact that you may not have a job tomorrow cloud your best judgement. or the fact that you were to cheap to pay you bills at vzw so you went to another carrier or the fact that you had a great job at vzw and your sorry ass got fired for being to dumb im sure if you are a good or great alltel representative you can find a place within the vzw family fact is vzw is a very very smartly ran co. and will be in business for years to come. all co. are going to lte and vodafone the largest carrier in the world is vzw’s co owner along with verizon not verizon wireless yes they are two different co. vzw is a (private) co and is not traded on the stock masrket (idiots) while verizon is trading stocks so while dummies are talking about vzw had to sell of assets and things to pay for the spectrum that was bought vzw will be the largest in the united states. can some of you see the big picture now. one phone all of the phones worldwide use with virtually seamless transaction. united states or europe same phone same number just make the call shut up and be happy.
the one thing most customers of any wireless company and as a general rule is: when companies compete the customer will always win. thats what most people are worried about, prices are driven as there is going to be not as much competition.
i luv tha idea like it would be good buy it now