NEW YORK - Verizon Wireless' deal announced yesterday to buy Alltel Corp. for $5.9 billion was applauded by investors and should mean a greater range of choices for Alltel subscribers. But some worried that Alltel's commitment to rural coverage would get lost.
Dan Yahro in Bishop, Calif., close to the border with Nevada, has two options for wireless service: Alltel and Verizon Wireless. Now that one is buying the other, he wonders what will happen.
"Alltel has twice the coverage of Verizon here. When you get into Death Valley National Park, which is where I spend a lot of time, Alltel is the only game out there," Yahro said.
Alltel's wide-ranging rural coverage in 35 states has given it 13.2 million subscribers and plenty of fans. In its area, mainly in the interior of the country and in the Southeast, it provides an alternative to the four big national carriers: Verizon Wireless, AT&T Inc., Sprint Nextel Corp. and T-Mobile USA Inc.
Having the No. 2 carrier, Verizon Wireless, swallow the No. 5 carrier, Alltel, would catapult it beyond 80 million subscribers and past AT&T Inc. to become the largest carrier in the country. It could also reduce competition in areas where Verizon Wireless and Alltel overlap.
A Justice Department spokeswoman said yesterday said the agency "would be interested in looking at the proposed transaction."
Analysts said a likely outcome of a regulatory review would be an approval of the deal, on the condition that Verizon Wireless sells spectrum licenses in areas where its coverage overlaps Alltel's.
On Wall Street, the deal went over well. Shares of New York-based Verizon Communications Inc., the controlling parent of Verizon Wireless, rose $1.98, or 5.35 percent, to close at $38.96, unusual for a company spending $28.1 billion including assumed debt on an acquisition. Verizon Wireless' other parent is Vodafone Group P.L.C. of Britain, with a 45 percent share of the joint venture.
Alltel was public until November, when it was taken private by TPG Capital and a unit of the Goldman Sachs Group Inc.
The private-equity firms came out slightly ahead on the deal, but nowhere close to the huge gains that are the goal for such investments. They paid $24.7 billion for the stock and took on $2.7 billion in debt, bringing the value of that deal to $27.4 billion.