Better 3G Coverage
On Friday, Dallas-based AT&T announced plans to obtain wireless properties from top competitor, Verizon, in efforts to improve 3G network coverage in America's rural neighborhoods. Eighteen states will be affected by the transaction.
Under this agreement, costing AT&T $2.35 billion, the telecom giant will seize 18 of the 24 markets that Verizon gained as part of its recent acquisition of Alltel Wireless. Because of Verizon's deal with Alltel, the wireless carrier became the largest provider in the United States - pushing AT&T down to the second position.
Friday's transaction, to be specific, will provide AT&T with various wireless properties, licenses, and network assets - including 1.5 million existing customers in nearly 80 service regions. The rural areas of Wyoming, Virginia, Utah, Tennessee, South Dakota, North Dakota, New Mexico, Nevada, Nebraska, Montana, Minnesota, Michigan, Kansas, Iowa, Colorado, California, Arizona, and Alabama will be affected.
"Wireless continues to be AT&T's greatest growth driver, and this transaction will complement our existing network coverage, particularly in rural areas," said AT&T Chief Executive Ralph de la Vega. "The acquisition will add network assets, distribution channels, and 850 MHz spectrum in a significant portion of the U.S., enabling even better coverage for AT&T's subscribers in those areas."
Changing the above-mentioned markets to Global System for Mobile (GSM) technology from Verizon's Code Division Multiple Access (CDMA) and converting operations to AT&T is predicted to take approximately one year. This transition is expected to cost approximately $400 million. Once the conversion is finished, customers in the above-mentioned areas will be able to enjoy AT&T's 3G network and compatible devices including the Blackberry Bold and iPhone.
The Dallas-based company told investors that the transaction is predicted to provide long-term stockholder value. This is AT&T's most recent initiative hoping to expand its wireless data services, which represents an important area of improvement. Last year, the telecom giant spent over $15 billion to extend its wireless network.