Despite the continued financial uncertainty surrounding a number of Sprint PCS network partners, the carrier’s largest affiliate by subscriber numbers-Alamosa Holdings Inc.-said last week it would be interested in further consolidation among the remaining affiliates.
Speaking at the Raymond James Midwest Mini Conference in Chicago, Alamosa Chief Financial Officer Kendall Cowan noted the carrier would be interested in acquiring one of its fellow affiliates, but current valuations are tempering any plans.
“Any of the affiliates are a good acquisition target for us because we are in the same business doing the same thing,” Cowan explained. “But we don’t think the footprints have the same economic metrics associated with them.”
Cowan added that during the past six months Alamosa has been able to differentiate itself from its fellow affiliates in the marketplace, and it has shown that its licensed pops, which are located in the Southwest, Midwest and Northwest, have more value than those of the other affiliates.
“They are not getting the same out of their assets as we are, and I think the market is recognizing that,” Cowan said. “We think as time passes there will be more separation and more opportunity to reset expectations of the other affiliates that will probably want to be consolidated. But, their expectations for value are too high. We think they are coming down, but they are not making a run for our doors today.”
Cowan added that Alamosa has had talks with many of its fellow affiliates about possible consolidation and that it is one of the few in the financial and operational position to pursue such a deal.
“All of the affiliates are a target and at one time or another we have probably talked to all of them in this space,” Cowan said. “This is a small group of people, and they get together frequently.”
Alamosa also claimed that it has been one of the few affiliates to have successfully integrated affiliate acquisitions, which it attributed to its leadership. Alamosa’s acquisitions include Roberts Wireless Communications L.L.C. and Washington Oregon Wireless L.L.C. as well as its merger with Southwest PCS Holdings Inc. in 2001.
“I’m sure they would have a different view of that,” Cowan said. “We were able to take properties that were not even contiguous to us and put in the right management structure, the right operating philosophy, and they worked out really well for us.”
Beyond its consolidation aspirations, Alamosa also commented on its increasingly positive relationship with Sprint PCS. The affiliate noted recent amendments to its services agreement with Sprint PCS are helping to stabilize revenues while Sprint PCS’ mobile virtual network operator arrangements with Virgin Mobile USA L.L.C. and Qwest Communications International Inc. as well as roaming agreements with fellow CDMA carriers Verizon Wireless and Alltel Corp. are proving financially successful for Alamosa.
Alamosa recently reported that wholesale and resale inbound roaming minutes increased more than 638 percent year-over-year during the second quarter to 79 million minutes, driving up roaming and wholesale revenues nearly 50 percent to $51.7 million during the second quarter of this year.
