AT&T Buying Remaining Alltel Spectrum for $780 Million

Posted by Sam Churchill on

AT&T today announced that it will acquire Atlantic Tele-Network which operates a subsidiary company Alltel for $780 million in cash.

Verizon Wireless bought the majority of Alltel in 2010, in a deal valued at $22 billion. The remaining 26 divested Alltel markets, including licenses, network assets and 800,000 subscribers were acquired by ATN. These remaining markets continued to be operated by Allied Wireless, a subsidiary of ATN, under the Alltel name

Under terms of the agreement, AT&T will acquire wireless properties, including licenses, network assets, retail stores and approximately 585,000 subscribers. The remaining Alltel 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 with coverage that 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”. Perhaps that implys that AT&T will (finally) allow roaming in the “A block” of the 700 MHz band. AT&T’s current 700 MHz LTE service uses the adjoining “B” and “C” blocks.

AT&T needs spectrum. Unlike Verizon, AT&T holds very little AWS band (1.7/2.1 GHz) to expand their LTE service. In August 2012, AT&T agreed to buy NextWave Wireless for some $600 million (pdf) to acquire frequencies in the 2.3 GHz band.

The deal to acquire 2.3 GHz was coordinated with satellite radio. In the deal, AT&T will not be able to use the two 5 MHz blocks adjacent to satellite radio frequencies (blocks C & D).

With today’s $780 million deal, Bloomberg reports, AT&T is acquiring operations that ATNI bought from Verizon in 2010 for $223 million. That means the business has more than tripled in value, despite losing more than 200,000 subscribers, said Chris King, an analyst at Stifel Nicolaus & Co. in Baltimore.

The transaction is subject to review by the FCC and the Department of Justice and to other customary closing conditions and is expected to close in the second half of 2013.

After the sale, Atlantic Tele-Network will have still have telecom operations in the U.S. Southwest, New England, New York State, Guyana, Bermuda and portions of the Caribbean islands, reports Reuters.

The big unanswered spectrum question in the United States is what will Charlie do? The 40 MHz of 2.1 GHz spectrum is the elephant in the room. Watch for fireworks at Mobile World Congress in Barcelona next month.

Posted by Sam Churchill on Tuesday, January 22nd, 2013 at 9:18 am .

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