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AT&T Buys More Alltel Operations For $780 Million

Unknown Lamer posted about a year and a half ago | from the savings-passed-onto-board dept.

Businesses 28

adeelarshad82 writes "AT&T has purchased the U.S. retail wireless operations of Atlantic Tele-Network Inc. (ATNI) for $780 Million. Alltel operates under the Alltel brand in several markets. The acquisition includes wireless properties, licenses, network assets, retail stores, and about 585,000 subscribers. It also includes spectrum in the 700 MHz, 850 MHz, and 1900 MHz bands, and that's likely the big draw as the carrier continues to build out its 4G LTE network. If the deal is approved by the FCC and Justice Department, AT&T expects it to close in the second half of 2013."

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More liek GayT&T (-1)

Anonymous Coward | about a year and a half ago | (#42671723)

XD first

Competition (2, Insightful)

cbhacking (979169) | about a year and a half ago | (#42671751)

Let me guess... this move, by the second-largest US carrier (and largest GSM carrier in the US) is supposed to "improve" competition, just like their last attempt?

Re:Competition (5, Informative)

alen (225700) | about a year and a half ago | (#42671781)

AT&T bought the part that the government said Verizon couldn't buy

verizon had to sell off a lot of alltel markets and AT&T bought them up

Re:Competition (3, Funny)

NoNonAlphaCharsHere (2201864) | about a year and a half ago | (#42671943)

I first read your post as "AT&T bought that part of the government...". Then I realized that was the case.

Re:Competition (1)

AliasMarlowe (1042386) | about a year and a half ago | (#42672017)

I first read your post as "AT&T bought that part of the government...". Then I realized that was the case.

But that's old news...

Re:Competition (0)

Anonymous Coward | about a year and a half ago | (#42672041)

Explain what you mean please, or were you just being edgy?

Re:Competition (4, Informative)

alen (225700) | about a year and a half ago | (#42672157)

verizon bought alltel a few years back
the US government identified 70-80 markets where verizon would hold a monopoly and told them they couldn't have them
these markets and customers were put into a new company whose ticker symbol is ATNI
AT&T is now buying these customers

There's a sucker born every minute (1)

Zontar_Thing_From_Ve (949321) | about a year and a half ago | (#42672563)

Let me guess... this move, by the second-largest US carrier (and largest GSM carrier in the US) is supposed to "improve" competition, just like their last attempt?

You got suckered by Sprint's explanation that they were only concerned about "competition" and that's why they opposed the T-Mobile buyout by AT&T. The real reason Sprint opposed it is that having a weak T-Mobile around allows them to tell their investors "We're number three! We're number three! Keep believing in our flatlined stock because at least we're still not the smallest player in the market!" Sprint cares nothing about competition. They just feared becoming the weakest and smallest major wireless carrier in the USA once T-Mobile vanished.

Re:There's a sucker born every minute (1)

cbhacking (979169) | about a year ago | (#42674971)

Sprint? I'm not even vaguely talking about Sprint. I'm talking about the massive line of bullshit that AT&T fed the FTC, telling them that somehow, buying up what is arguably their only direct competitor would *improve* competition somehow. Sprint, Verizon, and so forth weren't even in my mind. I'm just curious as to whether AT&T thinks they have a better shot at pulling off "no really, this is for the *good* of the GSM users in the USA!" argument this time around... or whether they're even going to try.

325000 iphone contracts (1)

vlm (69642) | about a year and a half ago | (#42671803)

To put that price in perspective, its the revenue from a third of a million iphone contracts
$100 per contract per month * 24 month contract * 325000 = 780e6
Obviously you're not allowed to put 100% of your revenue toward any specific task, but it provides a bit of perspective.
Also I'm not sure if $100/month would be considered cheap or expensive for an iphone monthly bill.
I stopped paying $6 for a virgin mobile dumbfone and upgraded to $19 for a republic wireless android phone some years ago when it was in beta. I'm so far out of the budgetary range for an iphone that I don't bother following the prices.

Re:325000 iphone contracts (1)

alen (225700) | about a year and a half ago | (#42671831)

iphones are $100 per contract if you're single

i'm on a 4 line family plan and my first month of the shared plan for 4 smartphones is going to be $200. maybe a little less. 3 iphones and a galaxy s3

Re:325000 iphone contracts (1)

dj245 (732906) | about a year and a half ago | (#42672295)

To put that price in perspective, its the revenue from a third of a million iphone contracts

I prefer to look at it a simpler way-

$780 million purchase price divided by 585,000 customers is $1333.33 per customer (coincidence??). I am not a business major, but this should be the valuation of both the assets of the company plus their expected future earning potential. You can then make various assumptions about profit $/customer/year. Then you can guess at the value of all the company's assets divided by the number of customers ($ infrastructure/customer). $1333.33/customer seems high to me for this kind of business, but I am not in the business. Maybe the spectrum is just that valuable.

Re:325000 iphone contracts (2)

icebike (68054) | about a year and a half ago | (#42672601)

That's probably a good running start.

I don't think that 1333/customer is exactly the right calculation though, because AT&T will have these service areas for a long time to come so there are future customers to consider as well.

If they do a good job (I know its AT&T, but it COULD happen...) they should be able to hold onto those customers (with new phone incentives - see below) and attract new ones. And, you are correct, the spectrum has a lot of value.

Missed by many is the fact that the cost is not the final price. AT&T is a GSM/LTE company and what they bought was for the most part was a CDMA infrastructure. That means they will have to double rack every tower as they transition to GSM gear [washingtonpost.com] and they have to keep the CDMA net running while they cut over all those users to GSM phones which could take a few years. (3 to 5 years is my guess, having had my prior cell provider purchased by AT&T some years ago). Or they may just keep the CDMA gear till it dies and resell roaming service to Verizon and Sprint et al.

So the cost side is not pinned down entirely any more than is the revenue side by the widely known facts as published.

Re:325000 iphone contracts (0)

Anonymous Coward | about a year and a half ago | (#42673821)

They can give Alltel customers a free phone upgrade and leave a single 1X channel active during the migration for embedded modems. This can be done in 3 months.

Re:325000 iphone contracts (1)

icebike (68054) | about a year and a half ago | (#42674197)

They can give Alltel customers a free phone upgrade and leave a single 1X channel active during the migration for embedded modems. This can be done in 3 months.

Can't and won't!

There is no emergency here. There is little incentive to rush. You grossly underestimate the task at hand.

Even if they wanted to shut down CDMA in three months, the FCC wouldn't let them (inconviences too many people), they can't possibly go through every tower that quickly, train their staff, and hire new techs, stock the phones, transfer all their customers phone book entries, deal with customer complaints, merge the customer database and sales system, provision every sales office with sim card writers, revise all contracts, etc.

Cell companies don't want to GIVE anything away.
Why should they, when they can just wait till you upgrade of your own free will, and pay for your own phone, either outright or on contract.

If they simply give each of their 585,000 users a new phone, even a middle range Android phone you are talking about a wholesale bulk order price to AT&T of around $200 per handset, or 117 million bucks minimum for all subscribers. If you FORCE a customer to change equipment, you have to eat the cost of the equipment.

The tower equipment they inherited is bought and paid for, and letting it sit there and run while they take their time about hanging new antennas, transmitters, and GSM backends on these towers is the only sensible way to go.

Spectrum Explanation... (1)

CMYKjunkie (1594319) | about a year and a half ago | (#42672309)

Someone nerdier than me: does the acquisition of spectrum only apply/assist reception for customers in the geographical area that Alltell serves? That is, by buying this spectrum the intention is to improve ATT service in this local area and has no effect nationwide?

Re:Spectrum Explanation... (1)

dkleinsc (563838) | about a year and a half ago | (#42672507)

I can pretty much guarantee you that this is not about spectrum or improving service. What the bigwigs actually care about when they plan big purchases like this is a larger customer base. Well, that and their personal bonuses.

Re:Spectrum Explanation... (1)

icebike (68054) | about a year and a half ago | (#42672651)

Someone nerdier than me: does the acquisition of spectrum only apply/assist reception for customers in the geographical area that Alltell serves? That is, by buying this spectrum the intention is to improve ATT service in this local area and has no effect nationwide?

Not much effect nation wide, other than to provide roaming services to travelers, (theirs as well as others).
The specifics as to which areas the spectrum licenses cover hasn't been made public. Sometimes these licenses cover a wider area than is currently being exploited.

So the expectation is that this will just fill a hole in AT&T's coverage map, and/or free them from having to pay roaming fees to their own customers that visit these areas.

ATT == Voltron?? (1)

Anonymous Coward | about a year and a half ago | (#42672315)

Anyone else look at AT&T (ma-bell) and imagine the phone company as Voltron, reforming into a gigantic beast?

Re:ATT == Voltron?? (1)

alen (225700) | about a year and a half ago | (#42672529)

happens in ever industry
in the early 1900's there were dozens of car companies

cell service is a commodity, its about the same everywhere in the USA. no need for 20 companies like we had in the 90's. i remember those days, they sucked. cell phone service ridiculously expensive back in 2001

Re:ATT == Voltron?? (1)

icebike (68054) | about a year and a half ago | (#42672683)

Odd you give subtitles for AT&T, but non for Voltron. Not all of us live and die by comic books or animated cartoons.

RIP Alltel (0)

Anonymous Coward | about a year and a half ago | (#42672343)

They were the only cell phone carrier I've ever had that I actually liked. Since then, I've chosen whichever provider has sucked the least.

Same with Adelphia cable.

Duopoly (0)

Anonymous Coward | about a year and a half ago | (#42673015)

Long story short...

Verizon bought much of Alltel up a while back but the FCC would not allow them to get them in certain areas as that would give them a full on monopoly in them areas. So now AT&T is buying up the ones that Verizon couldn't have to help solidify their duopoly and make sure no one else can have them. We can't go around and actually allow a competition to possibly form, now can we?

Neither Verizon nor AT&T should be allowed to buy up other companies given the current situation we have with them. If we had a setup similar to Europe were we have dozens of carriers competing against each other for my business then it would be one thing, but we have a handful of companies that make sure not to compete for my business and a few others who buy and resell from them (Straight Talk, Family Mobile, Trackfone, etc....).

We need to break them up like what the did with the old phone companies and be just as hard about it along with baring them from doing some of their more anti-consumer practices and REQUIRE them to actually build out their infrastructure or lose spectrum so that others can. I would go as far as to allow actual communities to make and run their own.

I am an Alltel Authorized Agent (3, Interesting)

Anonymous Coward | about a year and a half ago | (#42673221)

But not for very much longer.

I am in a city which already has an Alltel corporate store and an AT&T premier agent. My store is small and I have been struggling ever since the Verizon/Alltel merger went through back in 2009. For a few months I also had a store (which I had invested a lot of money in) in an area destined to become a Verizon market. Foolishly, I was hoping that the 2nd store would be allowed to convert to selling Verizon. Instead, Verizon told me that they did not need distribution in that particular town, and, while I did not have to close, I would not be selling Alltel or Verizon there after a few months. Exactly 6 months after I had moved out, Verizon opened a store there with another independent dealer, in the same town.

Now this. Not to say I was not expecting it. Alltel has been bleeding customers over the last 3 years, and they have been squeezing out their dealers by reducing their commissions, adding chargebacks to things that did not use to have chargebacks (such as upgrades) and lowballing phones at their corporate stores such that their agents cannot compete on price. (This, on top of saddling them with a massive broken point-of-sale system which was always crashing and becoming unavailable for hours at a time.) I have even been losing my most loyal customers to these tactics. And I can't blame the customers, when they can get phones at the corporate store for $1 when I have to charge $150 or more just to break even, and the chargebacks just make it worse. And, a few years ago, Alltel sent out a helpful memo to their agents, suggesting that we encourage our prepaid minutes customers to sign up for automated replenishments through their online system, when a lot of our daily revenue was coming from people coming into our stores and replenishing with us. Not to mention buying accessories and phones while there. I ignored the memo, but it was still insulting to our intelligence that we would even consider that particular bit of bullshit.

Ever since this Verizon merger got approved, the remaining Alltel markets have been repeatedly screwed by Verizon, as well. Verizon played games with the towers so that for a while I could not even activate a phone over the air without picking up a Verizon tower (from my store!). When I secret-shopped the local Verizon corporate, I asked the store manager if Alltel coverage in this area was going away. He said yes (that was 2009). The statement was not true, and I can only guess this what he was telling everybody who came in there.

One way or another, AT&T, Alltel and Verizon all have screwed me in the past few years, and I can only hope that sinkholes open up under their world headquarters.

(BTW, not that it matters much at this point, did you know the executives in Little Rock can't even get a signal on an Alltel tower, because Arkansas is not one of the 6 remaining states in which Alltel has a market. They probably all use Verizon phones.)

Aside from the many agents who will get screwed as part of this deal, the customers that I have helped bring to Alltel will be left being screwed by AT&T and their world class fucked-up billing system. But at least they will have more choices in the market for cellphone service (rolls eyes).

Re:I am an Alltel Authorized Agent (1)

Electrawn (321224) | about a year ago | (#42674793)

Thanks for yet another business example of why you don't put all your eggs in one basket. I.e. Zynga -> Facebook relationship, or sort of similar situation in Chicago with Areawide Cellular and Cingular. At least the family that ran Areawide Cellular also ran nursing homes. http://articles.chicagotribune.com/2003-04-28/business/0304270544_1_wireless-carriers-cingular-wireless-at-t-wireless [chicagotribune.com]

I am sure you also tried to sell Dish/Direct for that same commission hit as a diversification measure. Problem is the carriers and satellite have no intrest in developing agent businesses as a franchisee/ franchiser would.

Just being in the "agent" business is at most a decade business run.

Re:I am an Alltel Authorized Agent (0)

Anonymous Coward | about a year and a half ago | (#42679859)

Actually computer repair/consulting is my other business, since before being an agent. Tried diversifying, as you suggested, into satellite, but this town is already saturated (5 on this road alone).

New company name? (1)

Snotnose (212196) | about a year and a half ago | (#42675835)

AT&T&A.

Re:New company name? (1)

lavaboy (21282) | about a year and a half ago | (#42680519)

why not ATTILLA?
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