Verizon Wireless is to sell US$2.35 billion in mobile assets to rival AT&T in order to meet the regulatory requirements of its recent acquisition of Alltel. AT&T said in a statement it will acquire wireless properties, including licenses, network assets and 1.5 million current subscribers in 79 service areas, primarily in rural areas across 18 US states. The transaction primarily represents former Alltel assets, but also includes assets from Verizon Wireless and the former Rural Cellular. AT&T reportedly beat off competition for the assets from a range of other interested parties, said to include private-equity firms Blackstone, Carlyle Group, Kohlberg Kravis & Roberts & Co and Providence Equity Partners, as well as at least one US cable provider. In a separate deal AT&T said it is to sell US$240 million in mobile assets – including some 120,000 subscribers – to Verizon. The assets relate to AT&T’s acquisition of Centennial in November 2008. Like the Verizon-Alltel deal, the sale of assets relates to overlap issues between AT&T’s existing footprint and Centennial and is aimed at easing regulatory concerns.

Verizon completed its acquisition of Alltel – a deal that saw it overtake AT&T to become the largest mobile operator in the US – in January this year on condition it divested certain assets. AT&T said it expects the cost of integrating the Alltel assets to result in an earnings per share dilution of US$0.06 per share in the first year after closing. It added that it will invest an additional US$400 million in capex in 2009 and 2010 to convert subscribers from Verizon’s CDMA network to GSM. “Wireless continues to be AT&T’s greatest growth driver, and this transaction will complement our existing network coverage, particularly in rural areas,” said Ralph de la Vega, president and CEO, AT&T Mobility and Consumer Markets. “The acquisition will add network assets, distribution channels and 850MHz spectrum in a significant portion of the US, enabling even better coverage for AT&T’s subscribers in those areas.” The transaction is contingent upon regulatory approval and is expected to close in the fourth quarter of 2009.