May 10, 2006

Rural carrier Alltel Corp. beefed up its coverage through a pair of nationwide reciprocal roaming agreements with larger rivals Sprint Nextel and Cingular Wireless.

Alltel’s 10-year deal with Sprint Nextel begins July 1 and covers CDMA voice services along with 1x and EV-DO data services, the company said.

The deal is significant as it provides Alltel with access to Sprint Nextel’s extensive EV-DO footprint as well as the carrier’s voice coverage in larger markets.

Analysts noted the deal provides Alltel with another option for its roaming needs, which are currently served by an extensive voice and data agreement with Verizon Wireless that is set to expire in 2011.

“This agreement with Sprint provides a long-term, cost-effective roaming option for Alltel customers without limiting our strategic alternatives,” said Kevin Beebe, group president of operations at Alltel.

Bear Stearns telecommunications analyst Phil Cusick also noted that the deal increases the possibility of Sprint Nextel acquiring Alltel, though Cusick noted he did not expect such an action until at least 2007.

“We wouldn’t expect this in 2006, but a deal could become more likely in 2007+ as Sprint gets the Nextel transition under control,” Cusick noted in a research report. “The possibility of a bidding war for Alltel is the most bullish story in the stock, and having Sprint more interested and aligned is a big plus.”

Separately, Alltel said it renewed its roaming agreement with Cingular for another six years, through 2012. The company noted that the agreement covers GSM voice and data services and allows for expansion of GSM technology into heritage Alltel markets that are currently served with CDMA technology.

“Alltel’s extension with Cingular will provide our company with some revenue upside in our wholesale business and gives Alltel an inside view of the development path of GSM technologies,” Beebe said.

Alltel inherited a significant GSM footprint following its acquisition of Western Wireless last year. Alltel also provides GSM roaming services to T-Mobile USA Inc.

Financial details of the agreements were not released.

Source: RCR