US mobile phone company Alltel agreed a $6 billion (€4.6 billion) deal yesterday to acquire Western Wireless, the US parent of the third Irish mobile operator, Meteor.
The deal will bring together two of the largest rural mobile phone providers in the US, creating the fifth-biggest mobile phone company in the country with 10 million subscribers.
Alltel will issue approximately 60 million shares to Western Wireless shareholders and pay about $1 billion in cash to finance the deal. It will also assume estimated net debt of $1.5 billion.
The US firm will add Western Wireless's 1.4 million US subscribers and 1.6 million international subscribers in six countries to its operations following the agreement.
Mr Scott Ford, Alltel chief executive, said the firm intended to retain Western Wireless's international business, but would review the future of its traditional US fixed-line phone business over the next 12 months.
In a conference call with analysts yesterday, Western Wireless chief executive, Mr John Stanton, said Alltel's strategy for the international business, which includes Meteor, would not change because of the deal.
"The [international ]operating businesses that we hold are attractive," said Mr Stanton. "The virtue is they are independent and so as a consequence if opportunities present themselves to sell them off at a high price they can be taken... I believe that is the same view that Alltel has."
Meteor, which has about 250,000 subscribers in the Republic, has been the subject of intense press speculation that Eircom will make a bid for the business as a way to re-enter the mobile phone business.
However, a spokesman for Eircom would not comment yesterday on speculation that the Alltel deal would bring the prospect of a bid for Meteor any closer.
Mr Stanton also told analysts that Western Wireless had dropped a previous plan to spin off its six international operations into a separate listed business unit.
The lopsided nature of Western Wireless's international businesses, whereby Meteor in Ireland and Tele.ring in Austria are much larger than its other businesses, would have created tax problems for the proposed new international unit, according to Mr Stanton, who will join the board of Alltel.
Alltel said the combined company, which will have about $10 billion in annual revenue, should realize savings of about $ 800 million from operating synergies, interest and taxes. Alltel indicated that it would cut some jobs, but provided no specifics.
The transaction is expected to close by mid-year 2005 and is planned to be accretive to earnings in 2006. It will require approval from Western Wireless shareholders and regulatory authorities, said Alltel.
Under the agreed deal each share of Western Wireless stock will be exchanged for 0.535 shares of Alltel common stock and $9.25 in cash. Western Wireless shareholders will have the ability to make an all-stock or all-cash election.
Shares of Western Wireless, which have risen by about 30 per cent in the last month, rose 97 cents to $37.49 in early trade in the US. Alltel shares were down $1.16 at $54.96.
