The telephone company Alltel Corp. is buying cellular phone service provider 360 Communications Co. for about $4.1 billion in stock, creating one of the nation’s largest wireless communications carriers.
The deal announced today is the latest in a series of acquisitions in the $200 billion-a-year phone industry aimed at allowing companies to offer a full range of services, from local and long-distance to wireless and Internet services. Subject to shareholder approval, it also would save money by eliminating duplicated expenses.
No layoffs of the combined 20,000 employees are expected, although some employees might move as operations are consolidated at Alltel’s Little Rock, Ark., headquarters, company executives said.
The latest alliance would boost Alltel’s annual revenue to about $4.5 billion and give it a total of more than 5.6 million customers in 22 states. It would create the third-largest wireless company in the country, executives said.
“Alltel and 360 share a common view that the winner in the competitive telecom market will be companies that can expand revenue sources to integrated services offerings, operate more efficiently and create more opportunities for customers to use their products and services,” said Dennis Foster, president and chief executive of 360 Communications.
“Together, we become a more powerful competitor in a broad market place,” Foster said.
Chicago-based 360 Communications was spun off from the Sprint Corp. in 1996. Since then, it has beat Wall Street earnings estimates by keeping down costs and rapidly building its customer base. The 360 Communications name would cease to exist after the merger is completed.
Alltel is No. 11 in the mobile-phone business while 360 Communications is No. 8, based on number of customers, according to the Yankee Group, a Boston-based high-tech research firm. Both companies’ markets concentrate on midsize and smaller cities.
The merger could enable Alltell to challenge BellSouth, its chief rival in the Southeast, as well as cut costs for both companies. Some analysts speculated the merger would make Alltel a more attractive takeover target as consolidation continues in the industry.
Alltel recently bought licenses to offer digital wireless services in several of 360’s markets, but the buyout would save the expense of building networks in those areas, analysts said.
Alltel already is spending $60 million to build networks in cities including Jacksonville, Fla., and Memphis, Tenn., for personal communications services. PCS offers digital wireless voice and data services.
MEMO: This sidebar appeared with the story: ABOUT THE COMPANIES Alltel: Has about 3 million telephone customers in 14 states mostly in the Midwest and Southeast for local, long-distance, wireless and Internet services. It has made about 250 acquisitions since the 1950s. 360 Communications: Has about 2.6 million cellular customers in 15 states, mostly in the Southeast and mid-Atlantic. It was spun off from the Sprint Corp. in 1996.