The second largest US cellular operator, Verizon Wireless, has announced it is to buy smaller rival Rural Cellular for USD2.67 billion in cash and assumed debt. The deal will add 716,000 subscribers to Verizon’s customer base, which stood at 62.1 million at the end of June, taking it closer to market leader AT&T, which claimed 63.7 million at the same date.
Rural Cellular has licences which cover a population of around 4.7 million people in Maine, Vermont, New Hampshire, New York, Massachusetts, Alabama, Mississippi, Minnesota, North Dakota, South Dakota, Wisconsin, Kansas, Idaho, Washington and Oregon. The smaller operator currently uses both CDMA and GSM technology, and Verizon says it plans to transfer all GSM customers to its own preferred CDMA network. Verizon Wireless is paying USD45 a share for Rural Cellular, to a total purchase price of USD757 million; it will also assume around USD1.9 billion of debt. It expects to realise more than USD1 billion in synergies from the takeover, in reduced roaming and operations expenses. The deal is expected to close in the first half of 2008.