Alltel has gained some great market share due in large part to a clever marketing campaign which featured Verizon Wireless, Sprint and AT&T as three nerdy cell phone salesmen who try to outdo the cool Alltel guy. Naturally, in every commercial the Alltel guy won out. Well, it looks like in real life the nerdy Verizon Wireless will really win out in the end.
Verizon Wireless has announced that it has entered into an agreement to acquire Alltel in a transaction valued at US$28.1 billion. This includes the purchase of Alltel’s equity in the amount of US$5.9 billion and the acquisition of US$22.2 billion of Alltel’s debt. The cash merger is targeted to be completed by the end of the year.
The acquisition of Alltel will add an additional 13 million customers in 34 states to Verizon Wireless’ subscriber rolls. The company will also be able to add 57 primary rural markets it currently does not serve. Verizon Wireless currently has 67.2 million customers and has annual revenue of US$43.9 billion. Upon the completion of the merger, Verizon Wireless could have the largest number of wireless subscribers for a U.S. wireless company, which would take the title away from AT&T, who currently serves 71.4 million wireless subscribers.
Read more from the Verizon Wireless press release.
Brian’s Opinion
Wow, I didn’t see this coming, but now that Verizon Wireless has announced it, I suppose it makes perfect sense. This is a quick way for Verizon Wireless to add 13 million subscribers to its bottom line and become the largest wireless company in the U.S., based on subscriber totals.
I must admit, I am a little sad to hear about this merger. I was a huge fan of the Alltel commercials which had nerdy kids fighting the cool Alltel guy. Unfortunately, I’m not sure how Verizon Wireless could have the nerdy Verizon Wireless kid become friends with the cool Alltel guy. Also, since the Alltel commercials put Verizon Wireless in a bad light, we could be seeing a close to a great run of Alltel commericials.
I suppose Sprint and AT&T will try to take advantage of the Alltel acquisition by getting Alltel subscribers coming near the end of their contracts to switch to one of their services. You can expect a huge effort from Verizon Wireless to prevent that from happening. Verizon Wireless will attempt to retain Alltel customers by “pumping up” the Verizon Wireless services they will gain access to. There may also be some Alltel services that are introduced to current Verizon Wireless customers to give those subscribers another reason to stick around.
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