Why is alltel still around

Welcome to the Consumerist Archives Thanks for visiting Consumerist. Related lost verizon. Previous Priceline Books Me In 3. Sources familiar with the situation said on Monday that Alltel accepted the takeover instead of completing an auction that had attracted at least two other teams of suitors. First-round bids for Alltel, with around 12 million customers, were not due until June 6, sources said.

As a result, Alltel accepted the offer without knowing whether its auction would draw even higher bids. Some governance experts said the company may have to provide answers on the way it reached the deal.

CNBC, the cable news channel, reported Monday that Alltel proposed an earlier bid deadline due to concerns over potential financing problems, and two investor groups said they could not submit a bid in time.

But it will take months before the companies can integrate their network operations and billing systems. This means that during the transition, Verizon customers will not be able to receive service at Alltel stores, and vice versa. Alltel customers are also not yet a part of Verizon's in-calling plans. But once the integration is complete, that will change. He literally drew his own road map showing his route to success, depicting himself on top after successive mergers with smaller players.

Unfortunately, the high-powered, cash rich days of the dot. By the start of the new century, it was all over. An oversupply of infrastructure was built to support web-based businesses that would never launch. Many of those already in business shuttered their virtual doors. Venture capital for telecommunications projects dried up. But there was still plenty of money to be made in wireless, and Alltel did obtain financing to launch mergers and buyouts with as many small cell phone providers as possible.

The business of mergers and acquisitions earned countless millions for Wall Street banks, who charged fees to help structure the deals and usually helped finance them. Executives always won, even if a merger brought an end to their career at the company. Golden parachutes kept the top floor happy. The only losers were the soon-to-be-ex-employees and middle management declared redundant and escorted from the building. Meanwhile, customers were stuck dealing with the transition changes, service interruptions, and the eventually higher bill that always result from reduced competition.

During the first half of this decade, it was Alltel doing the acquiring — spending fortunes to acquire other regional wireless phone companies:.

By , Alltel had become the fifth largest telecommunications company in the country, with operations in 34 states. Thanks to lengthy roaming agreements with Sprint and Verizon Wireless, Alltel could deliver national service even from a regional network.

Alltel also enjoyed a satisfied customer base, thanks to innovative calling plans and services that were unheard of from other cell companies.

In , it introduced the popular My Circle calling plan, which allowed customers to make unlimited wireless calls to up to ten numbers, regardless of whether they were landlines or other Alltel wireless customers. That same year, U Prepaid was introduced, which included unlimited calling and text messaging to a pre-designated number — perfect for those needing to call home. Until the Telecom Act, most publicly-owned telephone companies were considered a safe utility stock.

The companies were hardly growth hotbeds, traditionally serving communities that saw little growth and lots of expenses from the wide-open country they had to wire. After deregulation, venture capital moved aggressively into the wireless and cable sectors. But unlike the phone company, these providers were not required to deliver service to everyone. Most of these services would only challenge the phone company in population centers within towns and villages, that also happened to be where most of their customers lived and worked.

The business model was changing. As rural phone companies began losing customers to cable and wireless providers, some of them looked to mergers and acquisitions to reduce costs and improve revenues to keep revenue stable, even as customers disconnected.

To maintain interest and investment from stockholders, many traditional publicly-held phone companies began paying shareholders increased dividends, which attracted attention from Wall Street. On July 11, , one independent phone company set a new bar for dividends and probably changed the long term business models of rural phone companies for years to come. With a payout like that, investors began demanding increasing dividends from other phone companies, Alltel included.

To pay that kind of dividend, you need revenue, and slow-growth rural phone companies cannot just generate millions in new revenue selling voicemail, long distance plans, and caller-ID. That kind of money comes from new lines of business, such as broadband, or from cash-generating mergers and buyouts.

Broadband required millions of dollars in new investments, increasing short term costs and having to wait several years to see a return. Mergers and acquisitions delivered fast cash and instant results — short term benefits Wall Street loves to see. So while phone companies continued to lose landline customers at rates up to 7 percent per year, another round of frenzied consolidation through mergers and buyouts erupted.

For Alltel, already established with a strong wireless division, seeing the long term prospects of trying to sustain its landline business as it lost customers seemed pointless. Alltel would henceforth be a wireless phone company-only, and a much richer one at that. With a dwindling number of wireless companies to acquire, speculation grew Alltel itself would soon become a takeover target. Now, Wall Street investment bankers would own and control Alltel outright. Company executives won the equivalent of the Powerball Lotto:.

But Goldman Sachs had no intention of running its own phone company for long. Bloomberg News took an in-depth look at the Alltel acquisition by Goldman Sachs and ongoing wireless consolidation.