Alltel Corp. is on track to complete its wireline spinoff by mid-year, and the company plans to extend CDMA2000 1x EV-DO services to about 60 percent of its potential customers, Chief Financial Officer Sharilyn Gasaway told analysts at the Bank of America Media, Telecommunications and Entertainment conference last week.
Gasaway described Alltel’s 2005 as “the busiest year that we have had in a long time.” The company launched EV-DO service in a dozen markets covering about 20 percent of its pops, worked to integrate properties it bought from Cingular Wireless L.L.C. and closed on its acquisition of Western Wireless Corp.
Alltel also rolled out a new prepaid sub-brand, U Wireless, as it gets more active in the prepaid space. Gasaway said that Alltel previously hadn’t had a billing system that allowed it to offer data services for prepaid customers, but that it has recently gone through a conversion that enabled such an offering.
Gasaway noted, however, that the company would continue to focus on postpaid customers, expanding its handset line-up to include MP3-capable phones and offering expanded data content. Alltel recently added Research In Motion Ltd.’s EV-DO Blackberry, the 7130e, to its device line-up, as well as Kyocera Wireless Corp.’s KX12 with walkie-talkie capability.
This year, Alltel plans to close on its purchase of Midwest Wireless and begin integration work, as well as complete the sales of international properties it acquired when it purchased Western Wireless in the same time frame.
Once Alltel completes the wireline spinoff and merging that business with wireline company Valor Corp., the remaining pure wireless player will have about 10.7 million customers and about $7 billion in revenue. Gasaway said the company was “still evaluating whether we want to participate” in the spectrum auction this summer.
In terms of possible mergers and acquisitions that Alltel might be interested in, Gasaway said that any acquisitions would have to be accretive and that companies that Alltel might be expected to look at were trading at value multiples that meant the company was probably going to stick to focusing on its $3 billion stock buyback. So far this year, Alltel has purchased First Cellular of Southern Illinois, a small CDMA carrier with a GSM overlay and almost a half-million customers. In mid-March, Alltel also bought out the remaining 50-percent stake in 10 partnerships with Palmetto MobileNet L.P. that it did not already own. The partnerships covered 2 million pops in North and South Carolina.
Fielding a question about EV-DO buildout and the possibility of Alltel being acquired-which many analysts expect to happen-Gasaway replied, “We run the business to run the business. We really don’t run it for purposes of being acquired by another company. We do what we think is necessary to continue to drive growth.”
She went on to add that customers’ appetite for data applications was significantly greater if they were on EV-DO, and she credited the network speed for the difference. Once Alltel achieves its goal of offering EV-DO service to 60 percent of its pops, Gasaway said the company would have to evaluate “what makes sense in the remaining markets.”
