AT&T Keeps New Wireless Entrants at Bay for $2.35B

logo AT&T (s T) said Friday afternoon that it bought some of Verizon Wireless’ (s VZ) rural spectrum and assets for $2.35 billion as part of mandated divestitures associated with Verizon’s acquisition of Alltel. Customers will have one year to give up their CDMA-based phones, and AT&T will spend about $400 million over the next two years to transition the networks in the 79 service areas from CDMA to its GSM-based network.

The good news is that the 1.5 million customers who now will have wireless service from AT&T can pick up an iPhone if they choose. The bad news is that AT&T apparently beat out more than 30 bidders, including some private equity firms, to pad its place as a key holder of wireless spectrum. Given that several cable companies interested in building out wireless services were speculated to be potential bidders, I wonder if AT&T was interested in the customer base or more interested in keeping new competitors out of the wireless market?

AT&T also said it agreed to sell five service areas it acquired when it purchased Centennial Communications to Verizon Wireless for $240 million.