AT&T Wireless Services Inc.’s two largest affiliates, TeleCorp PCS Inc. and Tritel Inc., agreed to merge in an all-stock, tax-free transaction.
The deal is valued at about $5.3 billion.
TeleCorp is AT&T Wireless’ largest affiliate, with 142,231 subscribers at the end of last year and markets covering 16.7 million people in Louisiana, Tennessee, Arkansas, New Hampshire, Massachusetts and Puerto Rico. Tritel, AT&T’s second-largest affiliate, has licenses covering 14 million pops in Mississippi, Tennessee, Alabama, Kentucky and Georgia. Both companies market their service under the SunCom brand name.
The combined company, which will have a licensed service area covering 35 million people in 14 states and Puerto Rico, will be called TeleCorp PCS.
In a separate agreement, TeleCorp and AT&T Wireless agreed to swap certain markets. TeleCorp is trading 1.9 million pops in its New England markets-which include Worcester, Cape Cod, Martha’s Vineyard and Nantucket, Mass.; and Nashua, Manchester and Concord, N.H.-for 1.9 million AT&T Wireless pops in Wisconsin.
In addition, TeleCorp is acquiring 4 million pops from AT&T Wireless covering other areas of Wisconsin, as well as areas around Des Moines, Iowa, for about $410 million in TeleCorp stock, and it secured rights to develop another 1.4 million pops in Wisconsin and Iowa if it is able to secure the needed spectrum, said the company.
“While our New England market was an excellent market for us, the new properties better fit our contiguous service area,” said Gerald Vento, chief executive officer of TeleCorp. “When you couple them with the Tritel properties, our operation will run from the Great Lakes to the Gulf of Mexico, right through the heartland of the country.”
In total, the transactions will make TeleCorp the ninth-largest wireless carrier in the United States and the third-largest pure personal communications services player, said Vento.
“The geographic fit is extraordinary,” said Vento, noting the company will have a presence in 16 of the top 100 U.S. markets, with a subscriber base of about 245,000 people.
Tritel Chairman and CEO William M. Mounger will become chairman of the new company, while Vento will remain CEO.
The transactions, which are expected to close during the fourth quarter, have been approved by the boards of both TeleCorp and Tritel.
In other news, TeleCorp reported fourth-quarter revenues of $39.5 million, including service revenue of $22.4 million and roaming revenues of $10.1 million. Net loss for the quarter was $114.1 million, or $1.29 per share.
For the year, TeleCorp’s revenues were $87.7 million, including $41.3 million in service revenue and $29 million in roaming revenue. Net loss for the year totaled $275.1 million, or $3.58 per share.
