DOJ Approves Verizon Merger with Alltel
The Department of Justice this afternoon approved the $28.1 billion merger between Verizon Wireless and rural carrier Alltel to create the nation's largest wireless company on the condition the merged company divest assets in 100 markets to ensure competition.
Before becoming official, the merger must pass final regulatory approval by the Federal Communications Commission at its meeting Nov. 4.
Public interest groups have criticized the merger between Verizon, the nation's second-largest carrier, and Alltel, the fifth-largest carrier as a move that will stifle competition and hurt consumers who would be faced with fewer choices among cell phone network operators. The combined company would have 80 million subscribers.
The addition of Alltel's network to Verizon Wireless is valuable because it gives Verizon greater access to hard-to-reach rural areas, where it is expensive to build cell towers and other technologies to support high-speed wireless services.
Last March, Verizon spent $9.4 billion for valuable wireless radiowaves in the FCC's auction, which the company plans to use for high-speed wireless Internet access to compete with similar plans by AT&T and Sprint Nextel's WiMax technology project.
During a third-quarter earnings conference call earlier this week, Verizon Communications chief executive Ivan Seidenberg said that the tighter credit environment would make the merger more costly, eating into previous expectations that shareholders would receive an additional 10 cents a share in the first year after the merger. But he reiterated the company's commitment to follow through on combining the two carriers.
The $28.1 billion acquisition represents the purchase of $5.9 billion in Alltel's equity and the assumption of $22.2 billion in debt held by Alltel.
"Our goal, of course, is to close the deal as fast as we can," he said during the call..
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