Alltel's retail shops, 585,000 customers and the chunks of the 700MHz, 900MHz and 1900MHz bands it operates will soon be part of the AT&T family. Pending an FCC review, of course. This morning the former Ma Bell announced that it would be purchasing the American assets of Atlantic Tele-Network, which uses the Alltel brand here in the US, for $780 million. While the additional customer revenue will surely be welcome, it's clear that AT&T is primarily after the spectrum here, which it calls "largely complimentary" to its current holdings. The smaller carrier is particularly popular in the rural areas of Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina -- places that the nation's second largest mobile network could use a boost in.
Besides regulatory approval, which shouldn't prove to be a major obstacle, the company also faces challenges integrating Alltel's existing infrastructure with its own. Currently the smaller carrier operates a CDMA network on its frequency bands, which must be retooled to work with AT&T's GSM, HSPA and LTE technologies. Customers will also need to be migrated from their current handsets to AT&T compatible ones. So, while rural customers could see a significant improvement in coverage, we wouldn't expect the deal to bear fruit immediately. For more, check out the PR after the break.
AT&T To Acquire Wireless Spectrum and Assets from Atlantic Tele-Network, Inc., Enhance Wireless Coverage in Rural Areas
DALLAS--(BUSINESS WIRE)--AT&T* today announced that it has signed an agreement with Atlantic Tele-Network, Inc. (ATNI) to acquire the company's U.S. retail wireless operations, operated under the Alltel brand, for $780 million in cash. Under terms of the agreement, AT&T will acquire wireless properties, including licenses, network assets, retail stores and approximately 585,000 subscribers.
ATNI operates under the Alltel name in the U.S., and its network covers approximately 4.6 million people in primarily rural areas across six states - Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina. The acquisition includes spectrum in the 700 MHz, 850 MHz and 1900 MHz bands and is largely complementary to AT&T's existing network. ATNI currently operates a retail CDMA network for its subscribers in these areas. AT&T expects that as it upgrades the network, ATNI customers and existing AT&T customers who roam in these areas will enjoy an enhanced mobile Internet experience.
AT&T expects integration costs for network conversion from CDMA will not result in significant dilution to EPS or impact to cash flow. The transaction is subject to review by the Federal Communications Commission and the Department of Justice and to other customary closing conditions and is expected to close in the second half of 2013.
*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
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