Alltel buys another cell phone company
Just another billion dollar blip in the march to consolidation in the US cell phone market. Alltel announced it would buy Midwest Wireless, a Minnesota-based company with 40000 subscribers. The deal is for a little over a billion dollars.
Alltel is the #5 cell phone company in the US, with around 10 million customers. It bought out Western Wireless earlier this year in a $6.5 billion deal.
A Wall Street Journal article ("Alltel to Acquire Midwest Wireless For $1.08 Billion", 11/18/05) speculates on the reason for the deal:
Alltel is considering a plan to spin off its local-phone business to existing shareholders or do it in combination with a merger with another company. Possible merger partners could include Valor Communications Group Inc. or Citizens Communications Co.
If Alltel completes that deal, it would become a purely wireless carrier and would be likely to shop itself to bigger cellular operators. Potential acquirers would include Verizon Wireless and Sprint Nextel; both use the same technology as Alltel for the majority of its customers, called CDMA.
In other words, Alltel is buying in order to sell itself, repackaging itself for maximum impact. Thus the small fry get vacuumed up by the mid-size firms, who in turn become more tempting for the sharks.
