Verizon to regain top spot with Alltel acquisition

US mobile operator Verizon Wireless said Thursday it has agreed to acquire regional mobile carrier Alltel for $28.1bn in cash and assumed debt.

UK-based Vodafone, which holds a 45 per cent stake in Verizon, had confirmed the discussions earlier on in the day, sparking concerns over Vodafone’s long awaited dividend from its Verizon stake.

Voda had been expected to receive a dividend from Verizon in either 2009 or 2010, but an acquisition is likely to delay the procedure.

Alltel has just over 13 million subscribers, which combined with Verizon’s 67 million would put the carrier in the lead, edging just ahead of AT&T’s 71 million users. The move would mark a return to dominance for Verizon, which used to be the number one carrier prior to the 2005 merger of AT&T Wireless and Cingular Wireless.

In the wake of the deal, Verizon said it anticipates an annual run rate of synergies of $1.5-1.7bn by 2011.

The move also leaves Arun Sarin, chief executive of Vodafone, with another feather in his cap prior to his departure, and goes some way to justifying his refusal to let the stake in Verizon go.

“We expect the acquisition of Alltel to significantly increase the value of our 45 per cent interest in VZW through the realisation of substantial in-market synergies and to reinforce its leading position in the world’s largest mobile market by revenues. Whilst VZW’s free cash flows will initially be deployed in reducing net debt, the VZW Board has agreed to conduct an annual dividend review process and to the payment of enhanced tax distributions,” he said.