Alltel Assumes Full Ownership of Carolina Palmetto Networks
Alltel secured complete ownership of partnerships with Palmetto in the Carolinas for $455 million Thurs. The move is part of what on analyst called a “land grab” in the region as carriers of all sizes try and get as much spectrum as possible coming up on the AWS auctions. Most reports of the acquisition included rumors of a possible Verizon Wireless takeover of Alltel.
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Though the companies wouldn’t disclose the terms of the deal, CT Communications, which holds 22.4% of Palmetto, announced in a statement that the transaction cost Alltel $455 million, of which CT would receive $97 million.
The network partnerships cover about 2 million subscribers in 34 S.C. counties and 7 N.C. counties, the companies announced. The purchase gives Alltel complete control of 12 million customers in a 33-state region, with major advantages throughout rural areas. The carrier has focused on expansion, including pickups of Western Wireless, Midwest Wireless and First Cellular, after it shed its wireline component last year.
Many analysts have expressed concern over the debt Alltel has incurred in these pickups, both as an independent entity and in the case of a possible Verizon acquisition. Shoreline Research analyst Tim Scannell, however, said the move is part of the trend of wireless “land-grabbing,” with “lots of potential in regional growth.” Another industry source said midsized companies feel pressure to grow just to survive while smaller companies like Palmetto “are looking in the mirror” and realizing they have to sell. Scannell said the Palmetto purchase “may make the company a more attractive acquisition at some point, but… right now it is just a matter of market share and users.”
Meanwhile, Alltel CEO Scott Ford received a $1.88 million bonus for 2005. The bonus is down from the $2.21 million he received in 2004, though his base pay was slightly higher. In 2005 Ford also received $1.6 million in stock, $1.2 million in long-term incentive plan payouts and $400,000 in other compensation.