Verizon Wireless offers divestitures to buy Alltel

By Journal staff and wire services | Friday, July 25, 2008

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The prospects of becoming a cell phone orphan up for adoption by another company is upsetting some customers caught up in the Verizon Wireless wrangling with federal regulators over Alltel Corp.

"I don't like Verizon," Morgan Myers of Rapid City said Thursday. "I don't know what I'll do if they combine."

To win government approval of its proposed purchase of Alltel, Verizon on Thursday said it was willing to sell some of its cellular operations in North Dakota, South Dakota and parts of 16 other states.

In a letter to the Federal Communications Commission, Verizon said after preliminary discussions with the Justice Department, it is committed to divesting overlapping spectrum, operations and other assets where it is necessary to retain fair competition.

Verizon spokeswoman Robin Nicol said that means if Verizon buys Alltel, Verizon would be willing to sell some of its cellular operations to a competitor.

She emphasized that Verizon would likely not leave any areas completely. For example, the company may just sell one store in a town and keep others, she said.

"We are not saying that we are not going to do businesses in 85 markets," she said. "We would divest overlapping properties."

She said the FCC has rules against market monopolies. 

The proposed change has local residents wondering what will happen.

Ella Hamby of Rapid City renewed her contract with Alltel on Thursday and spoke with some of the local store's workers about the recent news.

"They're talking about it staying the same, but it always makes me nervous when you think things are going change, when you don't have any control over it," she said.

Over the past six years, Hamby has experienced Cellular One changing to Alltel and now, apparently, to Verizon. "I'm usually an optimist, but not in this."

Myers also has her doubts about the sale, and suspects that, like her, other Alltel clients "would probably be mad. People have their plans. It's just one more thing they have to worry about."

One industry analyst said that AT&T Wireless, Leap Wireless International and MetroPCS Communications may all be interested in buying some of Alltel's assets that Verizon may be willing to sell.

Nicol declined to comment about which company may be interested in buying the properties or how transactions between the companies may affect customers. She said the merger and Verizon's filing to the FCC are both in their initial stages, and it would be too early to speculate about what may happen.

Verizon has offered $5.9 billion for Alltel, plus assumption of Alltel's $22.2 billion debt. The deal, announced last month, would make Verizon Wireless the largest wireless carrier in the U.S.

The company, a joint venture of New York-based Verizon Communications and Britain's Vodafone Group, already has 68.7 million subscribers.

Some would be happy if Alltel's coverage remains the same. Chris Bessette of Rapid City thinks it would be nice if Verizon would get all the towers Alltel has in this area.

"The only thing that would bother me is if they would leave you high and dry," he said.

The company also said it is committed to honoring Alltel's existing roaming agreements with other regional and small wireless carriers that rely on the company to provide service in areas where they don't have operations.