They had to come up with another plan: Find somebody already in the business, somebody with some actual cash flow. Not that this is exactly an all-cash deal, either. The plan is to assume Alltel's $22 billion in debt, which will not help Verizon Wireless' balance sheet. (Alltel bondholders, however are thrilled. It's always better to be owed money by an oligopoly partner than a regular company.)
Alltel is big in the Midwest and on the coast from Virginia to Louisiana. A combination with Verizon would fill the last remaining gaps in Verizon's U.S. coverage - Nebraska, Nevada and so forth. Alltel customers in much of Maryland have to use roaming agreements with other carriers.
Marriage with Alltel would give Verizon too much market power in parts of the Southeast and West for almost any regulator. Approval would require substantial divestitures in those areas to a third party - probably Sprint/Nextel or T-Mobile.
But the combination is a problem nationally, too. The wireless-phone market is already flashing amber on statistical monopoly indicators. Consolidation has gone far enough. You want to serve Nebraska, Verizon? Go build some towers.
Everything we know about Barack Obama suggests his administration would block this transaction.
"We're going to have an antitrust division in the Justice Department that actually believes in antitrust law," he said last month. "We haven't had that for the last seven, eight years."
But a John McCain regime might look askance, too. McCain likes to compare himself to Teddy Roosevelt, the original trust buster. McCain has said he doesn't know as much about economics as he does about defense, but he knew enough to oppose the Federal Communications Commission's approval of big media mergers under Bush.
He was even concerned about corporate combinations under President Bill Clinton, telling Business Week in 2000 that he would "update" antitrust laws.
"Second of all, I say to Corporate America: I am worried about these consolidations," McCain told the magazine. "These mergers are the biggest in history. I want them watched carefully and I want them carefully reviewed. I am a free trader and I am anti-regulation. But I do read history, and I know there have been times these consolidations have hurt consumers."
No wonder Verizon Wireless and Alltel have ants in their pants.
It's hard to believe that the current Justice Department, which approved the merger of XM Satellite Radio and Sirius Satellite Radio (as well as the marriages of AT&T Wireless to Cingular and Nextel to Sprint), wouldn't OK the Verizon-Alltel match. But with bipartisan skepticism of such combos, and the Alltel-Verizon matchup rushed by an obviously political deadline, this deal ought to be cut off like a cellular customer in Antarctica.
jay.hancock@baltsun.com
