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Publication Date: June 2008
EVENT SPOTLIGHT
In early June, Verizon Wireless agreed to acquire Alltel from a private-equity group led by TPG and Goldman Sachs for an enterprise value of US$28.1bn. Alltel was highly coveted due to its expansive regional coverage and 13m customers, most of whom are more profitable postpaid customers. After the deal closes, Verizon Wireless will become the US market share leader with 9m more subscribers than previous leader AT&T Mobility. Facing pressure to increase its market share, AT&T responded by announcing that it will offer subsidies with the new 3G iPhone to better attract the mass market. AT&T’s reaction indicates the tightening opportunity to acquire new mobile customers in the US. Increased consolidation, a diminishing number of acquisition targets and a saturated and highly competitive marketplace will provide fewer prospects for growth through traditional means. To overtake Verizon, AT&T now has limited options and will soon need to concentrate part of its growth strategy on the sale of mobile broadband subscriptions via embedded devices.
Author: Dan Locke
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