Verizon and Alltel to merge

Verizon and Alltel to merge

Subject to regulatory approvals, the parties expect to complete the merger by the end of the year.

The merger would create an enhanced platform of network coverage, spectrum and customer care for both Alltel and Verizon Wireless customers, says Lowell McAdam, Verizon Wireless president & CEO.

Alltel serves more than thirteen million customers in markets in 34 states, including 57 primarily rural markets that Verizon Wireless does not serve. According to ABI Research, a merger would create the largest mobile communications company in the US, with a total of almost eighty million customers.

The transaction puts the Alltel markets and customers on a path to advanced 4th generation services as Verizon Wireless deploys LTE technology throughout its network over the next several years. Alltel's customers also benefit from Verizon Wireless' Open Development initiative, which welcomes third-party devices and services to use the Verizon Wireless network.

Alltel and Verizon Wireless both use a common network technology, which will enable a seamless transition for Alltel customers.

According to ABI Research principal analyst Dan Shey, broader implications of the merger include the impact on the competitive environment.

"There is a trend towards growth-by-consolidation and acquisition by many operators in North America and Europe," says Shey. "This development has top line implications, but more importantly continues to intensify the competitive environment, both regionally and globally."

Regionally, with fewer operators, the combined company's negotiating position with mobile infrastructure suppliers and device vendors would be improved, says ABI. As well, in Verizon landline footprint areas, Verizon is in a better position relative to cable operators who seek to add mobile to their portfolios when competing for triple and quadruple play services. Globally, Verizon stakeholder Vodafone has a stronger partner in the US, providing it with stability as it seeks to expand in emerging markets elsewhere.

Other implications of a consolidating operator environment affect opportunities for fixed-mobile convergence. Will a more powerful mobile operator environment drive more fixed-mobile convergence activity, or will customers be happy with only mobile telecommunications services?

Shey adds that LECs, such as Qwest and Embarq, as well as rural LECs with no mobile capabilities, will need to evaluate their positioning as they face choices between consolidating with a mobile operator or becoming MVNOs.

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