Verizon buys Alltel in $28bn deal

Alltel, the fifth largest US mobile operator, is strong in rural areas

Verizon Wireless has said that it is buying Alltel in a deal worth $28.1bn making it the largest mobile phone network in the US, overtaking AT&T.

Verizon Wireless - which is 45% owned by Vodafone - is paying $5.9bn for the firm and taking on $22.2bn of debt.

The deal comes about seven months after Alltel was bought by TPG Capital and GS Capital Partners for $27.5bn.

The combined company would have more than 80 million subscribers, with Alltel focused mainly in rural areas.

Consolidation trend

Analysts said that the deal could be a sign of wider consolidation in the sector, coming on the day that France Telecom made a proposed offer for Swedish firm Teliasoneria, which was rebuffed as too low.

This is a way of getting growth from a market that's becoming fully saturated Joseph Bonner, Argus Research See Vodafone shares See Verizon shares

UK-based Vodafone has been under pressure from some investors to sell its stake in Verizon Wireless and focus on markets in Asia and Europe.

But outgoing chief executive Arun Sarin has always insisted that Vodafone has no plans to sell its stake, citing the potential for further growth in the US.

Welcoming the Alltel deal, Mr Sarin said it would "reinforce" Verizon Wireless' leading position in the US market, with annual sales of more than $52bn.

The market appeared to welcome the deal, with shares in Verizon rising more than 6% and Vodafone gaining 3.5%.

"This is a way of getting growth from a market that's becoming fully saturated and beginning to slow down in growth," said Joseph Bonner, analyst at Argus Research.