Private Equity Enters The Wireless Space In A Big Way

from the money-money-money dept

A group of private equity firms are buying Alltel for $27.5 billion, capping off months-long speculation about the future of the company. While the scale of the deal is pretty huge, it's not all that surprising: there's been a lot of momentum lately in private-equity buyouts, as robust debt markets are making it easy for buyout firms to get financing. Also, Alltel -- which has quietly become the country's fifth-largest mobile operator by rolling up smaller regional firms -- still doesn't have a nationwide footprint, but in some sense, that's part of the reason the company was an attractive buyout target, since it means the company has plenty of room to grow. This buyout could represent something of a tipping point in the industry as fresh blood, unencumbered by legacy telco thinking, comes into the market looking for aggressive growth and kicks off a round of strong competition. Alltel already has something of a track record for this, as its My Circle plan, which lets users pick a handful of numbers (either wireless or landline, and on any carrier) and call them for free, forced other operators to respond with similar offerings. The deal could also see Alltel become a significant player in the upcoming FCC auction for 700 MHz spectrum, which was already expected to be highly contested, should its new buyers want to secure the spectrum necessary to build out a nationwide mobile broadband network.
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  1. identicon
    ScaredOfTheMan, 21 May 2007 @ 1:18pm

    I wish...

    I wish the future of AllTel will take the path of unencumbered and innovative ideas. Sadly I do not think it will.

    They were bought by a group of private equity funds so as far as the new owners are concerned AllTel serves 2 purposes.
    1. generate cash (which they will take out)
    2. to grow it only big enough and with the least amount of investment (because they take out the cash) so that they may turn around and sell it in 3-5 years.

    No private equity firm wants to be in the business of running a wireless provider for the long term.

    That's just my opinion after having a company I worked for get bought by a private equity fund.

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