AT&T Inc. (T:US), the second-largest U.S. wireless carrier, agreed to buy spectrum and subscribers from Atlantic Tele-Network Inc. (ATNI:US) for $780 million in cash, bolstering the company’s network and bringing in 585,000 new customers.
The deal includes the purchase of licenses, network assets and retail stores, Dallas-based AT&T said today in a statement. The spectrum is in the 700-, 850- and 1900-megahertz bands, making it complementary to AT&T’s network, the company said. Atlantic Tele-Network operates under the Alltel brand in six states, mostly in the South and Midwest.
AT&T, led by Chief Executive Officer Randall Stephenson, has been snapping up airwaves in a bid to catch up with Verizon Wireless, the No. 1 U.S. carrier. Verizon won approval last year to buy airwave rights from Comcast Corp. (CMCSA:US) and other cable customers for about $3.6 billion. Wireless carriers rely on spectrum to transmit phone calls and data to mobile devices.
Demand for spectrum has increased consolidation in the wireless business and buoyed the values of companies that own a desirable collection of airwaves. With today’s deal, AT&T is acquiring operations that ATNI bought from Verizon in 2010 for $223 million. That means the business has more than tripled in value, despite losing more than 200,000 subscribers, said Chris King, an analyst at Stifel Nicolaus & Co. in Baltimore.
“Clearly the deal is a hugely successful investment for ATNI,” King said in a note to investors.
AT&T shares (T:US) were little changed in New York today, closing at $33.61. The stock climbed 11 percent last year. ATNI, based in Beverly, Massachusetts, jumped 12 percent to $44.20.
The company expects the Alltel purchase to be completed in the second half of 2013, assuming it’s approved by the Federal Communications Commission and the Department of Justice. The transaction won’t significantly affect cash flow or dilute earnings per share, AT&T said.
The acquisition follows at least 24 spectrum deals by AT&T in 2012, including a $600 million purchase of NextWave Wireless, a plan with Sirius XM Radio Inc. to use satellite signals, a radio-wave deal with Comcast and Horizon Wi-Com LLC, and a variety of smaller transactions with regional carriers.
AT&T tried to address its spectrum needs in 2011 through a $39 billion takeover of the fourth-biggest carrier, T-Mobile USA Inc. Facing opposition by regulators, AT&T walked away from the deal in December 2011.
The company has said that data traffic is doubling annually, and that demand for spectrum will exceed supply in some markets starting in 2013. Stephenson has criticized Washington for the capacity constraint, saying last year that a regulatory logjam was keeping deals from going through quickly enough.
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