The timing of the transaction also isn’t surprising. Several analysts agree that Verizon is trying to beat the clock — that is, push the deal through before the Bush administration leaves office. The FCC, led by Chairman Kevin Martin, practically has rubber-stamped every major telco takeover since 2005. Verizon stands to get “more favorable regulatory treatment under the current FCC than a theoretical Democratic FCC under a theoretical President Obama, so now's the time to do this deal,” said Dawson. [phone+]
The VC's gain $1.3B in just 7 months.
The $28.1 billion sale of Alltel Corp. just seven months after two private equity firms bought the wireless carrier isn't a typical 'quick flip', more an opportunistic deal amid a tough credit market. .... TPG Capital TPG.UL and Goldman Sachs Capital Partners bought the phone company in November in a $27.5 billion leveraged buyout ... Under the deal announced on Thursday, Verizon is paying $5.9 billion for the equity part of Alltel, making a $1.3 billion profit for the buyout firms... [reuters]
This will make VZW larger than ATT. And as it turns out, Alltel has more ARPU than both: "In comparison with AT&T ($51.10) and Verizon ($52.40), Alltel has an ARPU of $53.64 a month." [GigaOm]More from GigaOm:
- Analysts believe that Verizon can afford the deal, despite having to spend a lot of money on buying the 700 MHz spectrum. Vodafone’s two-line statement doesn’t indicate if Vodafone, which owns 45 percent of Verizon Wireless, will kick in something.
- The deal is part of a wave of consolidation being brought on by a slowing wireless market. UBS Research estimates that wireless subscriber growth in the U.S. decelerated to 8.6 percent in the first quarter of 2008 from 9.2 percent in the fourth quarter of 2007. Wireless penetration is over 84 percent. Wireless has been a big driver of earnings for the likes of Verizon and AT&T.
- Verizon would have to divest about 20 percent to 30 percent of Alltel’s points of presence in order to get the regulatory go-ahead. UBS Research thinks AT&T and T-Mobile might be interested.
- This deal doubles Verizon’s debt to about $42 billion.