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Verizon Wireless (NYSE: VZ), the second-largest U.S. carrier, is reportedly in talks to buy No. 5 Alltel (NYSE: AT) Communications for $27 billion, according to CNBC, which cited unnamed sources. Spokespeople at Verizon and Alltel declined to comment on the news, reported AP. Together, the two companies would easily surpass AT&T, the largest U.S. carrier. Little Rock, Ark.-based Alltel became a privately held company after it was bought out by TPG Capital and GS Capital Partners in November for $24.7 billion. Considered a regional carrier, it covers parts of 35 states in the middle of the U.S. and has more than 13 million customers. Together, Verizon Wireless and Alltel would have 80.2 million subscribers, surpassing AT&T’s 71.4 million customer base.
Of course, the acquisition makes sense. Verizon Wireless and Alltel use the same network technology called CDMA, but perhaps, Verizon would face regulatory hurdles given that the number of wireless operators has shrunk considerably in the last few years. One thing for sure is that it could be a blow to many mobile developers and third-party companies that rely on the smaller operators to be more risky and try-out new services before big behemoths like Verizon and AT&T (NYSE: T).
Update: Vodafone (NYSE: VOD), which has a 45 percent stake in Verizon, confirmed today that the US’s second largest carrier is in talks with Alltel to buy the rural carrier for $27 billion, reports Reuters.