06.09.2008 08:00 AM
Telecom mergers consolidate mobile industry

Telecom mergers dominated the news last week, as mobile operators worldwide continued on a rapid course of consolidation.

Verizon Wireless, owned by Verizon Communications and Vodafone, said it will buy Alltel in the United States for $5.9 billion and the assumption of $22.2 billion in debt. That would make it the biggest cellphone operator in the country, with 80 million subscribers.

In Europe, France Télécom offered to purchase TeliaSonera, a Swedish-Finnish telecommunications operator with a variety of holdings in Turkey, Russia and former Soviet states, for $42 billion in cash and stock.

Within hours, TeliaSonera, based in Stockholm and owned jointly by the governments of Sweden and Finland, which have a combined 51 percent stake, rejected the offer as too low. However, analysts said higher bids from France Télécom or others could persuade those governments to accept a deal.

A combination of France Télécom and TeliaSonera would create the world’s fourth-largest mobile operator, with 168 million subscribers, behind China Mobile, Vodafone and Telefónica of Spain, which operates the O2 brand. France Télécom operates mobile and other consumer services under the Orange brand.

In the United States, Alltel serves more than 13 million customers in markets in 34 states. This includes 57 primarily rural markets that Verizon Wireless does not serve. The transaction puts the Alltel markets and customers on a path to advanced fourth-generation services as Verizon Wireless deploys LTE technology throughout its network over the next several years. Alltel’s customers also will reap the benefits of Verizon Wireless’ Open Development initiative, which welcomes third-party devices and services to use the Verizon Wireless network.

The “New York Times” reported that operators around the globe are looking increasingly to the world’s last relatively untapped mobile markets in Africa, the Middle East and Asia. Sales momentum has slowed as cellphone penetration, or the number of phones in relation to the population, has approached or exceeded 100 percent in many European markets.

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