Alltel Begins Serious Discussions For A Sale
Sprint can't afford it
Alltel had the best fourth quarter out of any wireless phone company. In fact until recently, Alltel was the only wireless company that was debt free. Sprint is in so much money trouble as it is. They have a better chance of going under than to make this big of a purchase. Alltel said that they would not sell to Verizon, since they are Alltel biggest competitor. Alltel is the most profitable out of the big 5. So is 30 billion asking to much from Sprint? Considering their debt.
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Actually, in this industry Verizon or Sprint truly can’t afford this $30B purchase however there would be a lot of debt being issued or stock being offered as a secondary offering to help pay for it. Regardless, if a company truly wants a company like Alltel it can happen especially since there will be synergies in place. When there are synergies you have to take that overtime off the purchase price. Sprint/Nextel merger created $14.5 billion+ of synergies which is subtracted from the price of the actual buyout. Verizon and Sprint both have a lot of debt in the $30B range. Alltel, if I can recall, also has debt, so it isn’t a big deal especially since borrowing money is very cheap especially if they can deliver higher percentage and make mon...
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sprint could actully pull it off. once nextel is gone... CDMA will be the standard and with more then 60 million customers, it will be major profit gain then compared to the nextel churn.
i feel its risky but a good business plan and sprint could pull it off by leaving it 850mhz. of course there will be alot of debt which would probably take 10 years to make debt paid off but sprint can do it if they play thier cards right. they need to enable evdo on rural sites and with that happening they could become the largest high speed internet (even though they already are, i can say wireless internet would come to a major profit if evdo was everywhere.
i feel its risky but a good business plan and sprint could pull it off by leaving it 850mhz. of course there will be alot of debt which would probably take 10 years to make debt paid off but sprint can do it if they play thier cards right. they need to enable evdo on rural sites and with that happening they could become the largest high speed internet (even though they already are, i can say wireless internet would come to a major profit if evdo was everywhere.
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60 million customers?!? Where do you come up with 60 million customers for Sprint/Nextel? Cingular/AT&T is THE largest carrier in the US right now and they only have about 57million (followed closely by VZW with about 55million) Sprint/Nextel is way behind.
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Well if you do the math Sprint has around 53.6 million customers and if you add the 12 million Alltel customers that is more than 60 million. Perhaps that was his angle.
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Sprint actually has 53.6 million and not 60 million, but with the addition of the 12 million or so customers that Alltel has, it would be 65 million customers so they would quite strong.
Very interesting situation that you mentioned, the thing is, who cares about DO it is really all about Wimax, but since Sprint is having some difficulty with the additions of Alltel, it would allow for at least a more of a subscriber gain rather than a mix result especially since the IDEN network is struggling.
Great points.
Very interesting situation that you mentioned, the thing is, who cares about DO it is really all about Wimax, but since Sprint is having some difficulty with the additions of Alltel, it would allow for at least a more of a subscriber gain rather than a mix result especially since the IDEN network is struggling.
Great points.
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rmtp22 said:
Alltel had the best fourth quarter out of any wireless phone company.
No, they really didn't. In the 4th quarter, Verizon net added 2.3 million customers and ATT net added 2.4 mil. Alltel net added nowhere near that. Also, their churn is way higher than Verizon's (though about the same as ATT's).
Alltel said that they would not sell to Verizon, since they are Alltel biggest competitor.
That makes no sense at all. Cingular and ATT Wireless were rivals, yet they merged. This sort of thing happens all the time, petty emotions don't figure into it near as much as how good the deal offered is.
Alltel is the most profitable out of the big 5.
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Att and Cingy were not really "rivals". Both were in dif parts of the country with some overlap. The reason the merger made sense were the synergies from the low percentage of overlap. I do admitt that the parent companies of both entities (ATT and bellsouth&SBC) were rivals but ATT and AWS were seperate entities and thats why they merged at seperate times.
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