Verizon Mum on Alltel Takeover Rumor

Verizon Wireless isn't saying anything on fresh reports that it is mulling a $27 billion takeover of smaller U.S. CDMA rival Alltel Corp. (NYSE: AT).

"I've got nothing," a Verizon Wireless spokesman told Unstrung when asked for official comment on the rumors Wednesday afternoon. Alltel couldn't immediately be reached for comment

Citing unnamed sources, CNBC reported Wednesday that Verizon is considering a $27 billion bid for Little Rock, Ark.-based Alltel, the fifth largest operator in the U.S. Any new acquisition would be another major change for Alltel, which was taken private by TPG Capital and GS Capital Partners in May 2007 for $24.7 billion. (See Alltel Accepts $27.5B Buyout Offer.)

Adding Alltel would give Verizon more wirless subscribers than rival AT&T Inc. (NYSE: T), the nation's largest carrier. Alltel has over 13 million customers in 13 states and says that it added a million new users in the first half of 2008 through "internal growth." (See Alltel: The Numbers Game.)

Verizon, meanwhile, added 1.5 million mobile users last quarter; AT&T added 1.3 million new subs. AT&T, however, still leads the pack with 71.4 million wireless users, whereas Verizon has 67.2 million in total.

Combining Alltel and Verizon might also prove to be easier than thorny mega-mergers like Sprint Nextel Corp. (NYSE: S)'s 2005 hook-up, since both operators use the same underlying CDMA wireless technology. In fact, in June 2000 the operators did a spectrum swap to satisfy regulatory conditions around the formation of the Verizon Wireless joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NYSE: VOD).

Verizon buying Alltel would also fit the trend of the big four buying smaller operators to boost their customer bases. T-Mobile USA was the latest to show off a regional subs swell in the first quarter, adding 2 million new users in the first quarter of this year through its SunCom acquisition. (See T-Mobile Adds 2M in Q1.)

Alltel has been linked to possible buyout offers from its major rivals before, however. AT&T and Verizon were both said to be interested in 2005, 2006, and 2007, before Alltel accepted the private equity buyout offer. (See Alltel Acquisition Rumor Flare-Up.)

— Dan Jones, Site Editor, Unstrung