WASHINGTON (Dow Jones) -- Alltel is reportedly seeking a buyer and has talked to all its larger rivals, but prospects of a deal are unclear.
Yet Alltel's high market valuation could pose an obstacle to any deal. The mobile carrier is valued at almost $22 billion, a number sure to rise if takeover talk persists.
In recent action, shares of Alltel rose a penny to $59.91, as the stock ran into a strong headwind in U.S. markets. Most equities fell in recent trades.
None of the companies could immediately be reached for comment.
Alltel, the nation's fifth-largest mobile-phone company, specializes in supplying wireless service to customers in rural areas or smaller cities where big rivals such as AT&T and Verizon have less of a presence.
The company serves more than 12 million customers. In the most recent fourth quarter, Alltel reported net income of $216 million on a 14% increase in revenue to $2.1 billion.
Although Alltel has just one-fifth the customers of AT&T and Verizon, the company actually owns the nation's largest wireless network on a geographical basis.
Alltel allows major wireless carriers such as Verizon access to its network so customers of Verizon can "roam" beyond where they live without paying a stiff markup fee. The two companies have had a roaming relationship for years.
From a technological standpoint, Verizon or Sprint would make the best match. The networks of both companies operate on the same CDMA wireless technology used by Alltel.
Yet Verizon is more interested in acquiring full control of Verizon Wireless, a business it shares with UK-based Vodafone Group. The price tag to buy out Vodafone could easily exceed $50 billion.
Sprint, meanwhile, has struggled to integrate its 2005 acquisition of Nextel, making that company a less likely partner. Investors want to company to fix its own business before pursuing other acquisitions.
That might explain why Alltel reportedly has sought to engage AT&T, which has a history of aggressive deal-making under Chief Executive Edward Whitacre Jr. AT&T recently acquired BellSouth Corp. in a blockbuster deal that struggled to win approval from federal regulators.
The sale of Alltel to AT&T, the nation's largest phone company, could present further antitrust problems, especially so soon after the BellSouth deal.
Another complication: AT&T uses a different wireless standard than Alltel. AT&T, however, has shown success in the past at integrating other carriers with disparate technology.
(END) Dow Jones Newswires"
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