Verizon Wireless to Buy Alltel In $28.1 Billion Deal

Verizon Wireless agreed to buy Alltel for $28.1 billion, including $22.2 billion in debt, vaulting the combined company to first place in the U.S. mobile services market ahead of AT&T .

Verizon said the equity value of the deal would be about $5.9 billion.

Verizon Wireless, 55 percent owned by Verizon Communications and 45 percent owned by Britain's Vodafone Group, said the deal would generate savings of $1 billion in the second year after closing.

It said it expects total savings with a net present value of more than $9 billion.

The deal comes only seven months after Alltel was bought by TPG Capital and Goldman Sachs Group's GS Capital Partners for $27.5 billion. (See the accompanying Faber Report on Verizon buying Alltel)

That deal was the largest ever private equity investment in the U.S. wireless industry, but it closed amid a mounting credit crisis that has curtailed the leveraged buyout boom.

Some analysts said Verizon could be in a good position to refinance Alltel's debt at a lower interest rate; others said that a deal could also help Verizon create savings from a network and handset perspective.

Overall, analysts said, the deal made sense.

"Put simply, they can run Alltel more efficiently than Alltel can," said Bernstein analyst Craig Moffett.

Verizon Wireless and Alltel, which had more than 13 million customers at the end of the first quarter, together would have more than 80 million customers. AT&T ended the first quarter with about 71 million subscribers.

The two groups also use the same CDMA wireless network technology.