Verizon Wireless May Merge with Alltel

Here's some explosive wireless network controller news. According to a Reuters article, Verizon Wireless may be able to surpass AT&T as the top US mobile phone service provider if it succeeds in negotiating a merge with Alltel Corp.

Alltel Corp is one of the top rural mobile service provider in the US. The source of this scoop revealed that Verizon is offering to but Alltel for bout $27 billion in debt and cash. However, the $27 billion valuation could be comprised of mostly debt and a smaller amount of cash.

This merger will certainly have a significant effect in the wireless network operator industry. Alltel had more than 13 million customers at the end of the first quarter which means that a merge with Verizon will spawn a company with more than 80 million customers. AT&T, is considered the biggest U.S. wireless service based on customers with 71 million subscribers but will fall in second place should this merger becomes complete.

The source of this wireless network info also divulged that the ownership structure of Verizon Wireless would be altered if the deal is completed. Fifty-five percent of the company is owned by Verizon Communications Inc and Vodafone Group Plc owns the rest.

Needless to say, this development was met by surprise. The timing of this deal was unexpected since Verizon did not make any move when private equity investors bought Alltel about a year ago. However, Verizon Wireless expanding through an acquisition makes sense. Some experts also believe that Verizon may be able to operate Alltel more efficiently than Alltel. Verizon is a strong wireless franchise and has advantages of scale to run the business with greater efficiency.

As expected with these mega deals, both parties wanted to limit the information about the merger. Verizon declined to release comment on the matter while Alltel representatives were not immediately available for comment.

Mobile phone industry experts expect that a close review from U.S. antitrust authorities and regulators at the Federal Communications Commission will be conducted if Verizon proceeds to purchase of Alltel.

Well, this is certainly interesting. It seems that Verizon is making a move to wrest the top spot from AT&T. This is a major development so I think it's unsure if the deal will be completed. All we can do at this point is to tune to to the updates to this story. Tune in for more wireless network news and information on this blog.