He said he approached the private equity owners about the deal in April. Verizon and Alltel have an overlap of about 15 percent of their network coverage, he said, but that did not necessarily correspond exactly to the amount of divestitures regulators will require. Vodafone executives said on a separate call that holding on to its Verizon Wireless stake gave it the value from the investment and that the deal was expected to immediately add to its adjusted earnings per share.
Vodafone has frequently come under pressure from investors to cash in on Verizon Wireless. Verizon Wireless said Morgan Stanley acted as financial adviser for the deal and would provide bridge financing and that Citibank, Goldman Sachs and RBS advised the sellers. Or, if you are already a subscriber Sign in. Other options.
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With a payout like that, investors began demanding increasing dividends from other phone companies, Alltel included. To pay that kind of dividend, you need revenue, and slow-growth rural phone companies cannot just generate millions in new revenue selling voicemail, long distance plans, and caller-ID. That kind of money comes from new lines of business, such as broadband, or from cash-generating mergers and buyouts. Broadband required millions of dollars in new investments, increasing short term costs and having to wait several years to see a return.
Mergers and acquisitions delivered fast cash and instant results — short term benefits Wall Street loves to see. So while phone companies continued to lose landline customers at rates up to 7 percent per year, another round of frenzied consolidation through mergers and buyouts erupted. For Alltel, already established with a strong wireless division, seeing the long term prospects of trying to sustain its landline business as it lost customers seemed pointless.
Alltel would henceforth be a wireless phone company-only, and a much richer one at that. With a dwindling number of wireless companies to acquire, speculation grew Alltel itself would soon become a takeover target.
Now, Wall Street investment bankers would own and control Alltel outright. Company executives won the equivalent of the Powerball Lotto:.
But Goldman Sachs had no intention of running its own phone company for long. Bloomberg News took an in-depth look at the Alltel acquisition by Goldman Sachs and ongoing wireless consolidation.
Corrected Video 5 minutes. With the collapse of the banking sector in and , Goldman Sachs needed to get rid of assets to raise money. The Federal Communications Commission could alter or even kill its deal.
Unsurprisingly, Verizon can always count on help from free market allies and alleged community service groups with whom it has a financial relationship or contributes executive talent to serve on their boards.
Most of these have no involvement in telecommunications matters, except when it interests or impacts Verizon. Suddenly they spring to action, conveniently submitting similar comments supporting whatever Verizon had on the agenda before the FCC.
What consumers really got were major headaches, bad service, and much higher bills. Some readers of Stop the Cap! Penny writes:. I first had Midwest Wireless that was bought out by Alltel which was just bought out by Verizon. My phone is not even a year old.
Enough about phones, data charges, rude customer service. You want to talk about dishonesty and unfair practices…just say Verizon. In May I called and asked what I should do about leaving for a trip in which I would go out of my phone zone. The customer assistant that I talked to informed me that to avoid roaming charges I should temporarily switch to a national plan. I asked several times if I would be able to go back to my previous plan and was promised that I could set the start and end date for the new national plan.
Well can you guess what they did? Yep they did the old bait and switch and from what I know about law…. Verizon started the new plan almost after I got back from my trip and plus would not set me back to my old plan. So now I had over 2 times the old bill plus roaming charges and less minutes. All I can say is my last call to Verizon was asking when my contract was up and what the termination fee is. Penny was switched away from her grandfathered Alltel plan to a new Verizon service plan, and potentially also ended up with a brand new two year contract, without new phones to accompany it.
Any Verizon customer on a grandfathered service plan should never consider allowing a customer service representative to make substantial plan changes — you could lose your old plan. Grandfathered customers can make certain changes from the Verizon website adding text plans, changing calling features on phones, etc. Once you lose an old plan, you may never get it back. I was with Alltel for 15 to 20 years and a very happy customer — never a problem.
Then Verizon took over and it has been a problem ever since. First off let me tell you that we are truck drivers and travel all over the US. We were in Texas when our laptop died so we went and bought a new one.
Our Alltel air card would not work in the new computer. This was at the time when Verizon was taking over, so we had to go to Verizon and get a new air card. By the way we had unlimited with Alltel. The sales person in Verizon sold us a new card and got us on the road again. From that day forward we have had to visit a Verizon store about our bill every month.
Last month was the final straw. We did not like the 5 gig limit to begin with and did not trust it so we were watching it closely so we thought. Well when the bill came in it said we used over 8 gig and instead of our bill being Since this has happened we have already dropped their phone service and may have to drop the Internet and pay the penalties. Steve ran into the problem former Alltel customers frequently encounter when traveling or moving outside of their old Alltel service area.
Many Verizon representatives are not well trained about their new Alltel customers. If not correctly provisioned, equipment may not work properly outside of areas where Alltel had service.
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