The FCC voted to approve the transfer of control of licenses and other authorizations held by subsidiaries and
partnerships of ALLTEL from Atlantis Holdings to Verizon Wireless.
The approval paves the way for Verizon Wireless to provide a more robust national wireless service to its customers.
The FCC said it examined the market for mobile telephony/broadband services and concluded that the companies have demonstrated that the transaction, subject to the conditions described below, is likely to result in public interest benefits.
Based on a case-by-case analysis that found a potential for competitive harm in five markets, the FCC is requiring that one of the two companies divest the licenses and related operational and network assets in those markets. The Commission also conditioned its approval of the proposed transaction on Verizon Wireless' voluntary divestitures in 100 markets. The FCC believes these divestitures will prevent consolidation in individual markets from advancing to a point at which it would threaten competition and potentially harm consumers.
The FCC's approval also required a finding that the public interest would be served by extending the current foreign ownership ruling to permit Verizon Wireless to acquire up to and including 100 percent of the equity and voting interests in ALLTEL, its subsidiaries, and the partnerships in which ALLTEL holds a controlling ownership interest. This was due to the share that Vodafone holds in Verizon Wireless.http://www.fcc.gov
- Last week, The U.S. Department of Justice ruled to require Verizon Communications Corp. to divest assets in 100 areas in 22 states in order to proceed with its $28 billion acquisition of Alltel Corp. The Department said that the transaction as originally proposed would have substantially lessened competition to the detriment of consumers of mobile wireless telecommunications services in those areas, and likely would result in higher prices, lower quality and reduced network investments. Verizon and Alltel are significant competitors and each is the other's closest competitor for a significant set of customers in 94 Cellular Marketing Areas (CMAs), as defined by the FCC.
- In June 2008, Verizon Wireless agreed to acquire Alltel Corporation for $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. Both carrier operate CDMA networks and plan future LTE migration. Together, the companies serve over 80 million wireless subscribers. Alltel serves more than 13 million customers in markets in 34 states. This includes 57 primarily rural markets that Verizon Wireless does not serve. Alltel is currently owned by Atlantis Holdings LLC, an affiliate of private investment firm TPG Capital and GS Capital Partners.
At the time the deal was announced, 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.
