Bye Bye Alltel
Verizon Wireless announced this morning it will acquire Alltel Corporation for $28 billion, a deal that will create the USA's largest mobile operator. If approved by regulators, it heralds the most significant U.S. telecom deal since AT&T acquired BellSouth in 2006.
Alltel is the fifth largest mobile operator in the U.S., with 13.2 million subscribers in 34 states--added to Verizon's 67.2 million existing subscribers, the combined company would vault past current market leader AT&T, which boasts 71.4 million customers.
Analysts say that Alltel is a logical fit for Verizon. First, they share the same cellphone technology, called CDMA, and second, Alltel has customers in regions not serviced by Verizon.
“This move will create an enhanced platform of network coverage, spectrum and customer care to better serve the growing needs of both Alltel and Verizon Wireless customers for reliable basic and advanced broadband wireless services,” Lowell C. McAdam, the president and chief executive of Verizon Wireless, said in a statement.
What does this mean for the mobile content industry? Well, for one, content providers who have deals in place with Alltel but not Verizon will be sweating it as post-merger, Verizon management will look to streamline contracts, etc. And those content providers that do have good relationships with Verizon will be impacted as well as Verizon's leverage just went up about 20%. They will now control access to 80 million wireless subscribers or nearly 30% of the entire US base of wireless subscribers so if you want to reach that audience, you'll have to take what you can get from the carrier.
Think this isn't a big deal? Ask suppliers to Walmart what their margins are looking like these days.
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