Posts tagged ‘AT&T’
AT&T announced that the 1.5 million subscribers it will acquire from Verizon Wireless will be shifted from Verizon’s CDMA network to AT&T’s GSM network within 12 months of the deal’s completion. The assets were previously owned and managed by Alltel, which was acquired by Verizon Wireless earlier this year for $28.1 billion. AT&T, which will pay $2.35 billion for the assets, said it will spend another $400 million on the switchover. The AT&T-Verizon deal is expected to close in the fourth quarter of 2009, AT&T said. Subscribers in the mostly rural regions will be able to receive mobile broadband on AT&T smartphones, including iPhones and BlackBerry Bolds, after the transition is completed, the company indicated in an announcement late Friday. In a smaller deal in the wireless-infrastructure musical chairs exercises between the two largest U.S. wireless carriers, AT&T said it will sell some wireless assets of Centennial Communications to Verizon Wireless.
AT&T has agreed to acquire mobile assets from Verizon Wireless for USD 2.35 billion in cash. AT&T will acquire mobile properties, including licences, network assets and 1.5 million current subscribers in 79 service areas, primarily in rural areas across eighteen states. Verizon Wireless is required to divest these properties as part of the regulatory approvals granted for its purchase of Alltel earlier this year. The states represented are Alabama, Arizona, California, Colorado, Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Tennessee, Utah, Virginia and Wyoming. While the transaction primarily represents former Alltel assets, but it also includes assets from Verizon Wireless and the former Rural Cellular. AT&T expects integration costs for network conversion, amortisation of intangible assets and subscriber migration to result in dilution to EPS of approximately USD 0.06 per share in the first year after closing and to improve thereafter. Network conversion from Verizon’s CDMA network to GSM technology and transition of the operations to AT&T is expected to take no longer than 12 months from the date the transaction closes and to result in an additional planned capital investment of approximately USD 400 million over 2009 and 2010. The transaction is contingent upon regulatory approval and is expected to close in the fourth quarter. AT&T has also agreed to sell certain mobile assets of Centennial Communications to Verizon Wireless for USD 240 million.
US cellular operator Alltel has confirmed that it is continuing to provide services to the 2.2 million customers in 22 states which Verizon Wireless has agreed to divest under the terms of its USD28.1 billion acquisition of Alltel. Alltel says these subscribers will have no change to their services while a buyer for the networks is sought. Verizon leapfrogged AT&T to take the number one spot in the US wireless market when it bought out Alltel; AT&T is hoping to close the gap by acquiring the operations in the markets now being divested. These have been valued at around USD3 billion.
AT&T is intending to bid for around USD3 billion worth of Verizon Wireless assets reported the Wall Street Journal (WSJ). Verizon must sell off the assets as a condition set in the approval of its USD28.1 billion acquisition of Alltel which was completed last month. The assets include 2.1 million mobile subscribers across 22 states, wireless spectrum and other resources.
Other interested parties include a joint bid from private-equity firms Carlyle Group and Kohlberg Kravis & Roberts & Co; Providence Equity Partners LLC; and possibly at least one cable provider. AT&T is in the strongest financial position of all the potential bidders and should acquire the lion’s share. However, Gigi Sohn, president of the public interest group Public Knowledge, said the government should encourage Verizon to sell the assets to smaller players to enhance competition. The Department of Justice said it would examine affected markets and any competitive issues before giving its approval to the divestitures.
AT&T has reported growth in its wireless division, but experienced further declines in the fixed line sector in the fourth quarter of 2008. The company’s overall net profit for the quarter was USD2.4 billion, down 23.6% from USD3.1 billion twelve months previously. Revenue for the three months ended 31 December 2009 was USD31.1 billion, up 2.4% year-on-year. Wireless revenue rose 13.5% to USD11.5 billion, while total wireline revenue dropped 3.3% to USD17.07 billion. The company cited merger-related expenses, severance costs and upfront subsidies for the iPhone as contributing to lower income. Large declines in AT& T’s local and long distance business also played a significant role. Although the operator takes an initial hit in handset subsidies from the 1.9 million new iPhone customers it acquired in the quarter, in the long run it should generate significant profits from the higher monthly fees paid by users.
AT&T ended the quarter with 77 million mobile customers, slightly behind new market leader Verizon’s 80 million. AT&T’s churn rate remained flat at 1.2% for post-paid subscribers and was down slightly at 1.6% overall. Post-paid ARPU was up 3.9% versus the year-earlier quarter at USD59.59. The operator signed up a net 264,000 customers for its new U-Verse fibre-TV service to reach its year-end goal of one million. It had planned to reach 30 million living units by the end of 2010, but has now revised the target date to the end of 2011. AT&T added 357,000 broadband customers in the fourth quarter, including those who buy wireless aircards. In the fixed line division the number of primary consumer lines in service fell to 27.48 million from 31.01 million a year earlier.
Full-year 2008 revenue totaled USD124.0 billion, net income was USD12.9 billion and cash from operating activities totaled USD33.7 billion. AT&T issued a conservative forecast for 2009. The company has already taken steps to counter the financial downturn and has recently shed 12,000 jobs. The company has also said it will reduce its CAPEX spending on new equipment in 2009 by between 10% and 15%.
The loss-making US cellular operator Sprint Nextel has announced that it will cut its workforce by 13% as it streamlines its operations in an attempt to make annual cost savings of USD1.2 billion. The job cuts will be across all levels of the workforce and are expected to be carried out by end-March. The latest redundancies come on the back of 4,000 job cuts made last year. ‘Labour reductions are always the most difficult action to take, but many companies are finding it necessary in this environment,’ said Sprint CEO Dan Hesse. Last month rival operator AT&T announced that it was axing 12,000 jobs – 4% of its workforce – in an effort to cut costs.
The largest US cellular operator by subscribers, Verizon Wireless, has launched a new femtocell product which offers customers improved mobile coverage within their home or office. The new Network Extender indoor base station, which has been produced by Samsung, will retail for just under USD250 and improves coverage over an area of up to 5,000 square feet. ‘It’s like getting a million-dollar cell site in your home for USD249.99,’ said Jack Plating, executive vice president and chief operating officer of Verizon Wireless. ‘Network Extender makes Verizon Wireless’ reliable network even more reliable, filling in nooks and crannies for customers who see the need.’ Smaller rival Sprint Nextel has already introduced its own femtocell offering, while second-placed cellco AT&T is expected to launch its own product in the near future.