DOJ requires Alltel to divest assets in acquisition

The U.S. Department of Justice (DOJ) will require Alltel to sell off some of its assets in three central U.S. states before completing a $6 billion acquisition of competing wireless carrier Western Wireless Corp.

The DOJ, in a settlement announced Wednesday, said it will approve the acquisition if a court approves its divestiture requirements. The DOJ’s conditions would require Alltel, the sixth largest wireless carrier in the U.S., to divest assets in Kansas, Nebraska and Arkansas. The U.S. Federal Communications Commission must also approve the merger.

In a common procedure in merger cases with DOJ requirements, the DOJ’s Antitrust Division filed a civil lawsuit Wednesday in U.S. District Court in Washington, D.C. to block the proposed transaction. At the same time, the DOJ filed a proposed consent decree that, if approved by the court, would resolve the Department’s competitive concerns and the lawsuit.

An Alltel spokesman did not immediately return a phone call seeking comment on the DOJ proposal.

Alltel, with about 8.8 million wireless customers, announced in January its plans to acquire Western Wireless, the nation’s ninth largest wireless carrier, with about 1.4 million U.S. customers. The company markets wireless services primarily under the Cellular One brand in the U.S. Through its Western Wireless International subsidiary, the company also provides communications services in seven other countries.

The DOJ was concerned that the acquisition could limit consumer choice among wireless carriers in some rural parts of the U.S., according to a press release. The divestitures will “preserve competition in particular for residents of rural areas, who often have fewer choices for wireless telephone services,” J. Bruce McDonald, deputy assistant attorney general in the DOJ’s Antitrust Division, said in a statement.

Under the terms of the proposed consent decree, the merged firm must divest Western Wireless’ mobile wireless services business, including spectrum and customers, in nine markets in Nebraska, six markets in Kansas and one market in Arkansas.

Alltel, based in Little Rock, Arkansas, had revenue of $8.2 billion in 2004. Western Wireless, with headquarters in Bellevue, Washington, generated $1.9 billion in revenues in 2004.