Alltel, the United States' sixth-largest wireless carrier, is in advanced negotiations to buy Western Wireless, a regional carrier in the Northwest, for roughly $4-billion, executives close to the talks told the New York Times Wednesday night.
The deal, which would be the latest in the rapidly shrinking wireless industry, could be reached within the next week, the executives said.
Combined, Alltel and Western Wireless would have about $10-billion in revenue and 9.8-million subscribers _ about 6 percent of the national market. Alltel, which also has a fixed-line business, provides wireless service in parts of nearly two dozen states mostly in the Southeast and Midwest; Western Wireless operates in 19 Western states primarily under the Cellular One brand.
In addition to having complementary geographic footprints, the companies use the same wireless technology, a standard called CDMA.
The potential deal and a surge in prominent mergers last year reflects a renewed confidence among corporate executives, who have been buoyed by higher stock prices, a growing economy and low interest rates.
The talks between Alltel and Western Wireless could also signal a new phase in the $100-billion wireless industry as smaller regional carriers begin to consolidate. Among the major carriers, federal regulators are likely to resist any other potential mergers, assuming Sprint completes its planned acquisition of Nextel Communications.
The country has dozens of smaller carriers, like Western Wireless, that serve specific regional markets, often quite profitably.
With the market in the United States rapidly reaching saturation, large carriers like Cingular Wireless and Verizon Wireless want access to customers in rural areas without having to spend billions of dollars expanding their networks. To do that, national carriers have formed roaming agreements that allow their customers to use their phones cheaply when traveling outside metropolitan areas, and for local carriers to piggyback on the national carrier's network.
While the talks between Alltel and Western Wireless are on track to be completed next week, the executives warned that several points were being negotiated, including the final price, and that it remained possible that the talks could collapse. As part of the transaction, Alltel would also assume about $2-billion of debt from Western Wireless.