AT&T, Verizon Finalize Asset Swap - InformationWeek

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12/23/2008
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AT&T, Verizon Finalize Asset Swap

The swap, which stems from the acquisitions of rural carriers, will improve AT&T's voice and data coverage in several states.

Following regulatory approval from the Federal Communications Commission and the Department of Justice, AT&T and Verizon Wireless have completed a wireless asset swap.

In July 2007, Verizon Wireless gained about 700,000 subscribers when it acquired Rural Cellular for $2.67 billion. Verizon's network is based on CDMA technology, but Rural Cellular uses both CDMA and GSM.

AT&T's network uses GSM technology, and the asset swap gives it some of Rural Cellular's licenses, network assets, and subscribers. The company said the deal should improve voice and data services in Kentucky, New York, Vermont, and Washington.

On the other side of the deal, Verizon receives licenses, networks, assets, and subscribers from AT&T in Kentucky. The wireless assets come from AT&T's 2007 acquisition of Dobson Communications. Verizon will also receive 10 MHz of personal communications service spectrum for wireless services in an unspecified number of markets.

The swap was agreed to more than a year ago, and it's finalized as the mobile carriers are battling for subscribers. AT&T is the largest U.S. carrier in terms of subscribers with 71.4 million, and it has a large portfolio of attractive smartphones like the BlackBerry Bold, the iPhone 3G, and the HTC Fuze.

But with its $28.1 billion acquisition of Alltel, Verizon is set to become the largest U.S. carrier. The mobile operator will have nearly 80 million subscribers when the merger is completed. Verizon also is boosting its selection of smartphones and is the exclusive U.S. carrier of the touch-screen BlackBerry Storm and the Samsung Omnia.

The U.S. market may not have much room for brand-new subscribers, and industry experts see carrier growth mainly coming from poaching customers from other operators or through acquisition. With its 6.2 million subscribers, U.S. Cellular could be a target in 2009, and it operates on the same CDMA infrastructure Verizon uses. But the economic downturn and the expected contraction in the mobile market may make next year tough for acquisitions.

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