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Monday, 09 June 2008 |
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US cell phone group claims top spot in US.
With the confirmation of its acquisition of Alltel, Vodafone’s
US
affiliate Verizon Wireless has leapfrogged AT&T to become the country’s largest mobile operator.
The newly enlarged Verizon will have over 80mn customers and annual revenues of US$52.7bn. Verizon purchased Alltel from its current owners, a private equity group, for US$28.1bn. Arun Sarin, chief executive of Vodafone, said: "We expect the acquisition of Alltel to significantly increase the value of our 45% interest in VZW (Verizon Wireless) through the realisation of substantial in-market synergies and to reinforce its leading position in the world's largest mobile market by revenues. Whilst VZW's free cash flows will initially be deployed in reducing net debt, the VZW Board has agreed to conduct an annual dividend review process and to the payment of enhanced tax distributions."
The Verizon and Alltel networks use CDMA but long term Verizon plans to move to LTE. Commenting on this decision Steven Hartley, senior analyst at Ovum said, “In addition, the deal does nothing to undermine Verizon Wireless's decision, taken at the end of last year, to adopt LTE as its network evolution path. Therefore, Vodafone's intention of operating a single technology platform across its global holdings is unaffected. This can only help to drive further synergies in the future”.
Hartley also saw wider market implications in the Alltel acquisition,. “Outside those involved, the deal would also be a sign that the 'big four' is becoming the 'big two + two'. With this deal Verizon Wireless and AT&T are breaking further away from Sprint Nextel and T-Mobile. Can the smaller third and fourth placed players remain competitive?”
“A successfully completed deal would signal the end of an era for a company originally set up as an alternative to 'Ma Bell' in 1943. It would also further confirm the domination of the 'big four' (Verizon Wireless, AT&T, Sprint Nextel and T-Mobile). No other mobile operator in the
US
outside these four would have more than 6 million subscribers, and the big four would control 92% of US subscribers” continued Hartley.
Ian Channing |
