AT&T has agreed to acquire wireless assets from Verizon Wireless for $2.35 billion to enable Verizon to meet regulatory requirements for its acquisition of Alltel earlier this year.
AT&T will acquire licenses, network assets and 1.5 million current subscribers in 79 service areas, primarily in rural areas across 18 states. The transaction includes assets from Alltel, Verizon Wireless, and the former Rural Cellular.
AT&T expects the integration costs for network conversion, amortization of intangible assets, and subscriber migration to result in dilution to EPS of approximately $0.06 per share. Network conversion from Verizon’s CDMA network to GSM technology and transition of the operations to AT&T is expected to take 12 months, and will result in an additional capex of approximately $400m over 2009 and 2010.
Ralph de la Vega, president and chief executive of mobility and consumer markets division at AT&T, said: Wireless continues to be AT&T’s greatest growth driver, and this transaction will complement our existing network coverage, particularly in rural areas. The acquisition will add network assets, distribution channels, and 850 MHz spectrum in a significant portion of the US, enabling even better coverage for AT&T’s subscribers in those areas.