Atlantic Tele-Network, Inc., parent company to Allied Wireless Communications Corp., is selling its domestic retail wireless business operated under the Alltel name to AT&T in a $780 million all-cash transaction.
Allied, which based its wireless headquarters in Little Rock, serves approximately 585,000 customers in rural areas of six states — Georgia, North Carolina, South Carolina, Illinois, Ohio and Idaho – and has been operating properties in those areas in the aftermath of the $28 billion Alltel-Verizon deal in 2009.
Allied was formed to run several rural markets that federal regulators claimed needed expanded competition. At the time of the Verizon buyout, regulators mandated that a group of markets were to be sold to AT&T for about $2.35 billion and another smaller cluster of rural markets were sold to Atlantic Tele-Network for approximately $200 million. Allied employs close to 270 workers in central Arkansas to support its wireless operations.
Faced with the prospects of having to build out an expensive 4G network to remain competitive and seeing the opportunity to more than triple its return on its investment, Atlantic Tele-Network had little choice but to do take the offer, say some industry observers.
“We are pleased that AT&T recognizes the value of our U.S. wireless retail operations and is acquiring these assets,” said Michael T. Prior, Atlantic Tele-Network's Chief Executive Officer. “Alltel's customers will benefit from access to a nationwide 4G network, a larger device selection, additional retail locations and a broader range of product offerings. Additionally, many of our employees should benefit from new career opportunities within AT&T. We will work closely with AT&T to close the transaction and to ensure a smooth transition for our customers and employees.”
The deal is subject to regulatory approvals. The companies expect to complete the transaction in the second half of 2013.
Prior said that proceeds from the transaction would be used for “new acquisition opportunities, a possible reduction in debt outstanding, investments in our existing lines of business and returns to shareholders through dividends.”