Verizon Wireless will comply with a sweeping Department of Justice (DoJ) requirement that orders it out of 100 mobile markets across 22 states, in a move to see through its $28 billion acquisition of Alltel.
The order, which came late Thursday, seeks to keep wireless rates down and sustain consumer service options, according to DoJ officials. Verizon, which had previously agreed to divest interests in 85 markets, said it remained pleased with the DoJ ruling.
The merger remains under review by the Federal Communications Commission (FCC). The FCC is expected to vote on the merger on Nov. 4.
“We are pleased with the DoJ’s requirements and we look forward to gaining FCC approval as well,” a Verizon Wireless spokesperson told InternetNews.com.
The news comes as carriers scramble for ways to grab more users and more spectrum in additional markets and to broaden the services they offer to customers, who are increasingly demanding lucrative products like advanced wireless data services.
If approved, the acquisition would make Verizon Wireless — the joint venture of Verizon Communications (NYSE: VZ) and Vodafone (NYSE: VOD) — the biggest U.S. carrier. The deal aims to add Alltel’s 13.2 million subscribers to Verizon’s own 70.8 million subscribers, for a total of 84 million customers. AT&T, the current No. 1 carrier in the U.S., has a subscriber base of 74.9 million.
Alltel, the fifth-largest mobile wireless telecommunications services provider in the country, has a presence in markets in 34 states, including 57 rural markets that Verizon Wireless currently doesn’t serve. Verizon Wireless said it has not yet decided if it will sell off its market assets, or ones it gains from Alltel, to meet the DOJ requirement.
The DoJ said the divestiture order is among one of its most extensive.
“The divestitures required are necessary to protect wireless customers and are among the most extensive required by the Department in a wireless case,” Thomas O. Barnett, an assistant attorney general in the DoJ’s antitrust division, said in a statement.
The proposed merger was initially protested by rural wireless carriers. Leap Wireless (NASDAQ: LEAP) petitioned the FCC to deny the acquisition, claiming it would negatively impact its subscribers and give Verizon Wireless a “massive” amount of spectrum.