AT&T Acquires Alltel Spectrum And Subscribers For $780 Million

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AT&T Inc. (NYSE:T), the second biggest wireless carrier in the United States, said Tuesday that it has agreed to purchase the Alltel spectrum and subscribers for $780 million to strengthen its position in rural areas.  The deal will bring 585,000 new customers to AT&T.

AT&T Acquires Alltel Spectrum And Subscribers For $780 Million

Under the deal, Texas-based AT&T Inc. (NYSE:T) will get network assets, licenses and retail stores. The Alltel spectra are in the bands of 700, 850 and 1900-MHz, which complement AT&T’s complete network. The Alltel brand is operated by Atlantic Tele-Network, Inc. (NASDAQ:ATNI) in six states – Idaho, Georgia, Illinois, Ohio, North Carolina and South Carolina. During the first nine months of 2012, Alltel generated a revenue of $350 million.

AT&T, led by Randall Stephenson, is aggressively buying airwaves to catch up with Verizon Communications Inc. (NYSE:VZ). Last year, Verizon Wireless bought airwave rights from Comcast Corporation (NASDAQ:CMCSA) and many other cable customers for more than $3.6 billion. Wireless service providers depend on the spectrum to transmit data and phone calls to mobile devices.

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AT&T Inc. (NYSE:T) said that data traffic is doubling every year, and demand will soon exceed supply. As a result, the companies that own desirable airwaves are receiving overpriced bids.

The Atlantic Tele-Network, Inc. (NASDAQ:ATNI) bought Alltel operations from Verizon Communications Inc. (NYSE:VZ) for $223 million in 2010. Now AT&T is paying $780 million for the same operations, despite Alltel losing 200,000 subscribers in the past three years. That’s a successful investment for Atlantic Tele-Network.

The acquisition will be completed in the second half of 2013, if approved by the Department of Justice and the Federal Communications Commission. AT&T Inc. (NYSE:T) said the deal wouldn’t significantly affect its cash flow. Last year, AT&T completed 24 spectrum deals including the rights to use Sirius XM Radio Inc.’s (NASDAQ:SIRI) satellite signals, which was a result of a  $600 million acquisition of Nextwave Wireless Inc. (PINK:WAVE). AT&T completed many other smaller deals with regional carriers.

In 2011, the company had also tried to purchase T-Mobile USA Inc for about $39 billion to address its spectrum needs. But AT&T backed off due to opposition by regulatory authorities.

AT&T Inc. (NYSE:T) shares were unchanged in early trading session. Atlantic Tele-Network, Inc. (NASDAQ:ATNI) shares surged 9.86 percent to $43.25 at 11:21 AM EST.