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Alltel Buyout

The $5.9 billion Alltel buyout by Verizon Wireless on January 9, 2009, made it the largest cell phone company in the United States. With this deal, Verizon picks up 13 million customers of Alltel, increasing its customer base to nearly 84 million. It also picks up the Alltel debt to the tune of $22.2 billion, making the total acquisition close to $27 billion! Alltel picked up this debt when it was taken by TPG Capital and a subsidiary of Goldman Sachs – GS Capital Partners.

Verizon is to sell 105 markets found overlapping in 24 states, as a condition forced on it by the regulators at the Justice Department and the Federal Communications Commission. Though most would be Alltel properties, Verizon is also selling its Southern Minnesota’s and Western Kansas’ Unicel operations. Verizon has asked all Alltel customers not to do any thing and that during the transaction period all Alltel retail stores would be operational.

Verizon has said that during the transition period it would assess how best to serve customers and achieve synergy. It is expected that many of the best paying jobs in Alltel may have to go, though Verizon has assured that all below the executive level employees of Alltel would be retained. The assessment of employee retention would take a better part of the year.

Retaining Alltel Phones

With the buyout of Alltel by Verizon, rumours have been going around that all Alltel phones may end up being junk as the Alltel contracts expire. People are confused as to why they need to replace their phones. There is talk of issues such as Preferred Roaming Lists (PRLs). The PRLs are frequencies which particular phones need to in different areas to get reception.

Verizon has debunked these rumours and have assured the customers that as the handsets of both Verizon and Alltel are on the same system, they may be able to keep them. Customers, they say, would be required to replace them on ‘case-by-case’ basis. Of course, Verizon may introduce new equipment, just as Alltel may have done in the past. This will enable the customers to take up the promotion or not, as they would have done in the past.

Just as in the past when Alltel customers picked up phones that were compatible with the plans they selected, the same is true for Verizon. Understand what you want your phone to do. In the past you have picked up a phone depending on what services you required – voice mail?, GPS?, WiFi?.

The merger of the two mobile companies will increase the coverage areas for their customers. Certain areas that have stronger Alltel network, such as the Florida Panhandle, would now be part of the Verizon network.

Hold on to your phones. Do not throw them away. Alltel buyout by Verizon is not going to affect the Alltel subscribers immediately. There is no need to panic.

The deal is good all round. By midday on January 9, 2009 the 85,000 employee Verizon Wireless saw its share increase by 6 cents to $32.45.