Verizon Wireless to buy Alltel

June 7th, 2008 - 12:46 am ICT by Amrit Rashmisrisethi  

Verizon would buy rural mobile phone service provider Alltel Corp for $28.1 billion.The shares of Verizon Communications Inc, which owns 55 percent of Verizon Wireless, rose 6 percent after it said the deal would boost earnings by more than 10 cents a share in the first year after the deal, excluding items such as integration costs.

The shares of Britain’s Vodafone Group Pfc, which owns 45 percent of Verizon Wireless, rose 3.8 percent. Verizon Wireless said the deal would create savings of $1 billion in the second year after closing, which is targeted for the end of 2008, pending regulatory approval. It forecast total savings of more than $9 billion by 2011, driven by reduced capital and operating expenses.

Verizon said the deal would be cash-flow positive in the first year, although it estimated integration costs at $1.1 billion to $1.2 billion in the first year and $500 million to $600 million in the second.

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