AT&T acquires Alltel for $780M - The Deal Pipeline (SAMPLE CONTENT: NEED AN ID?)
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AT&T acquires Alltel for $780M

by Chris Nolter  |  Published January 22, 2013 at 10:28 AM
AT&TjobsCommercialTelecom.jpgRural telecom Atlantic Tele-Network Inc. said Tuesday, Jan. 22, that it will sell its U.S. retail wireless business to AT&T Inc. for $780 million.

The Beverly, Mass., carrier is making a striking return on its investment in the business which operates under the Alltel brand name and has 585,000 customers in Georgia, Idaho, Illinois, Ohio North Carolina and South Carolina.

The sale price exceeds the carrier's entire market capitalization of about $700 million.

Shares of Atlantic Tele-Network jumped close to $7, or nearly 18%, to $46.33 on Tuesday morning.

Chris King of Stifel, Nicolaus & Co. noted in a Tuesday report that Atlantic Tele-Network bought the systems from Verizon Wireless for $223 million in 2009. At the time, the operations had about 800,000 subscribers.

"Clearly the deal is a hugely successful investment for [Atlantic Tele-Network]," King wrote, "considering the loss of over two hundred thousand subscribers and a more than tripling of the value of the investment over a less than four year timeframe."

The size of the tax bill is a question, King observed, considering the profit.

Shares of other regional U.S. carriers Leap Wireless International Inc., Ntelos Holdings Corp. and U.S. Cellular Corp. traded lower Tuesday morning.

In addition to the U.S. retail business, Atlantic Tele-Network has Caribbean wireless operations, a rural U.S. wireline business and a Guyanese carrier.

The telecom said it may use the proceeds to fund acquisitions or reduce its debt, among other purposes.

Atlantic Tele-Network merged its Bermuda operations with local mobile carrier M3 Wireless Ltd. in early 2011. The telecom has a joint venture with one of its directors to invest in Caribbean wireless investments. The JV put money in a new Aruban venture in mid-2010.

The parties expect to close the deal in the second half of 2013, pending regulatory approval .

Stephens Inc. advised Atlantic Tele-Network, which received counsel from Cleary Gottlieb Steen & Hamilton LLP and Jenner & Block.

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Tags: Alltel | AT&T Inc. | Atlantic Tele-Network Inc. | Cleary Gottlieb Steen & Hamilton LLP | Jenner & Block LLP | M3 Wireless Ltd. | Stephens Inc.

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Chris Nolter

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