Financial Upheaval Shakes Verizon's Acquisition Of Alltel

Just about all parties directly involved in Verizon's planned $28.1 billion acquisition of Alltel want the deal consummated -- except perhaps Verizon stockholders, who hammered the company's stock again on Wednesday, causing it to drop 7%.

At the same time, the acquisition has been criticized by public interest groups, which maintain it would negatively impact competition.

Earlier this week, Verizon Communications chairman and chief executive Ivan Seidenberg said he expects the deal -- which would make Verizon Wireless the leading U.S. wireless provider -- to go through. "This is an asset that's going to be valuable to us for 20 or 30 years," Seidenberg said, according to The Wall Street Journal.

A successful merger of Verizon Wireless with Alltel, the fifth-largest U.S. mobile phone provider, would enable the Verizon unit to leapfrog AT&T, currently the biggest cell phone service provider. Verizon Wireless is jointly owned by Verizon Communications and minority owner Vodafone Group.

While the parties directly involved in the deal -- including Alltel private equity owners TPG Capital and Goldman Sachs Capital Partners -- are committed to gaining approval for the acquisition, the current financial and investment upheaval and malaise continue to raise fears that the deal could be rewritten, postponed, or even aborted.

The Federal Communications Commission is scheduled to vote on the deal at its Nov. 4 meeting. The Justice Department's Antitrust Division is also reviewing the acquisition.

In recent days, the Public Interest Spectrum Trust, a group of public interest organizations, has criticized the proposed acquisition, which, they maintain, would further consolidate the U.S. cell phone industry. Verizon, which argues that the acquisition would benefit consumers, has offered to spin off some duplicate services and provide additional consumer protections.

"We're scratching our heads on how this agency can rush to let the nation's second-largest carrier gobble up a strong competitor like Alltel to become the nation's largest carrier," Consumers Union senior legal counsel Chris Murray said, according to The Washington Post. "I guess it's Christmas in October for the wireless phone companies."