Verizon may acquire Alltel

US NUMBER TWO cellular operator, Verizon Wireless, could announce its intention to acquire relative minnow, Alltel, any day now. This would catapult the 45 per cent Vodafone-owned network into the Number One slot.

It's widely estimated that Verizon has about 67 million subscribers which, if it added Alltel's circa 13 million customers, would give a total of over 80 million subscribers. That puts it way ahead of AT&T's 71 million.

The two networks are a natural fit as they both are Cdmaone-based operators whereas AT&T is GSM based. It would give Verizon much greater clout with the Cdmaone handset vendors such as Samung and LG, too.

More importantly there's hardly any major overlap between the two networks and where there is, Verizon could easily sell off the spectrum to keep the industry watchdog, the FCC, happy.

Another sign of the close fit between the two networks is that it's been estimated that the vast majority of Alltel's circa $700 million revenues last year from 'roaming' customers came from Verizon anyway.

The remainder came from roaming Sprint Nextel customers and Sprint can't be too happy at the prospect of its rival getting this much bigger. Especially since absorbing the old Nextel customer base is proving harder than anticipated.

As the INQ pointed out previously, Alltel has already followed Verizon's lead and announced it is going with LTE as its 4G technology.

What's unclear is Vodafone's role in all of this. If Verizon can raise the anticipated $27 billion to acquire Alltel, it's arguments that it can't afford to pay Vodafone a dividend look completely thin.

As Michael Cain would have said, it's time for Vodafone to "apply a bit of pressure". µ

See also:
Alltel drives another nail into Wimax coffin