January 11, 2005

Regional operator Alltel said it has reached an agreement to acquire rural operator Western Wireless for about $6 billion in cash and stock.

The deal, which was hinted at last week, follows Cingular Wireless L.L.C.'s $41 billion acquisition of AT&T Wireless Services Inc. approved last October and Sprint Corp.'s recent agreement to acquire Nextel Communications Inc. for approximately $35 billion.

Alltel's deal, which will solidify the company's position as the nation's sixth-largest carrier with 10 million domestic wireless subscribers in 33 states, calls for each share of Western Wireless stock to be exchanged for 0.535 shares of Alltel common stock and $9.25 in cash.

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Western Wireless shareholders will also have the ability to make all-stock or all-cash elections.

Alltel added that in total it will issue 60 million shares of common stock and pay $1 billion in cash as part of the deal as well as assume approximately $1.5 billion in net debt.

Alltel's stock was trading down slightly early Monday at $55 per share, while Western Wireless' stock was up at $37.35.

Alltel will also acquire Western Wireless' international holdings that include 1.6 million customers in six countries.

"This transaction strengthens Alltel's position as the nation's top regional communications company and makes sense financially and strategically," said Alltel President and Chief Executive Officer Scott Ford.

"The domestic properties of Western Wireless are contiguous to Alltel's existing operations and create additional wireless scale and scope in attractive and complementary markets."

Ford also noted in a conference call with investors that the company would be interested in additional acquisition possibilities as well as selling its substantial wireline properties, which prior to the Western Wireless announcement accounted for nearly half of Alltel's business.

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Current Western Wireless CEO and industry veteran John Stanton will remain as a member of Alltel's board of directors.

Analysts noted the deal, which is expected to close by the middle of this year, should be fairly seamless as both carriers use CDMA-based networks and rely nearly entirely on cellular spectrum to serve their customer bases.

Western Wireless also operates a GSM-based network, which the carrier installed to serve roaming interests specifically with Cingular and T-Mobile USA Inc., on roughly half of its cell sites, while Alltel has a master roaming relationship with CDMA operator Verizon Wireless that runs through early 2010.

Source: RCR News

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