Verizon Wireless is about to make a pretty big purchase which will give them a pretty big title. According to Reuters, Verizon Wireless is all set to purchase Alltel Corp. (another mobile service provider) for $28.1 billion dollars. Once this purchase is complete, Verizon will take over AT&T’s spot as the largest player in the U.S. mobile market in terms of subscribers. As it stands, AT&T currently has 71 million subscribers but the combined Verizon and Alltel would have 80 million subscribers.
The actual price that Verizon is paying for Alltel is $5.9 billion, however Verizon will be taking on Alltel’s debt of $22.2 billion which means this deal is worth the aforementioned $28.1 billion dollars. According to Verizon, they hope to have the deal completed before the end of the year assuming they don’t run into any problems. A consumer rights group is already throwing up the red flags saying that this deal, “raises serious questions for consumers that will have to be addressed through antitrust analysis.”
Gigi Sohn who is the president of Public knowledge, a consumer rights group voiced her concern over the deal and said,
If the deal goes through, Verizon and AT&T will have 150 million of the nation’s 260 million mobile customers. With Sprint in a weakened condition, this deal will speed the unfortunate trend of giving consumers fewer, rather than more, choices in telecommunications services, while giving a few companies more control over the lives of consumers.”
After reading her concerns, does the public have reason to be concerned? What do you think?
I agree, I think companies getting bigger and bigger, i.e. more and more powerful and giving less and less choices to consumers, is not a good development except for those companies and the government. As consumer you might profit from cost savings (though companies need to make more and more profit too, so the cost savings don’t necessarily go to the consumer), but you hardly have anywhere to turn after bad experiences or if you need an option that is not offered anywhere anymore (standardization).
Why in the world would you want to buy a company that has a $22 billion debt? Doesn’t that make they’re doing something very wrong? This might turn out worse than the Sprint/Nextel deal.
That’s a good question Max, apparently they feel that the value of Alltel in the end is worth it!
Speaking of Sprint, rumor has it that they are trying to sell off Nextel. That didn’t last long!