Fitch: Event Risk Related to Verizon's Acquisition of Alltel

Business Wire, Sept 26, 2008

CHICAGO -- With the announced acquisition of Alltel Corp. by Verizon Wireless (VZW) during the second quarter of 2008, initial expectations were for the Department of Justice (DOJ) and Federal Communications Commission (FCC) to conclude the regulatory approval process by year-end. However, it's uncertain whether a FCC ruling could be delayed until early 2009. While the merger approvals from the FCC and DOJ will likely require certain market divestitures, possible spectrum divestitures and acceptance of other competitive conditions, VZW has already committed to divest certain markets following discussions with the DOJ.

Fitch believes a material level of event risk is present for some operators that may have interest in the wireless assets that VZW will need to divest as a result of DOJ or FCC reviews. While the acquisition of divested markets could be leveraging to an operator(s), the transaction can provide benefits in the longer term through expanded coverage footprints, improved cost efficiencies and enhanced strategic opportunities. Outside of AT&T, Fitch believes that United States Cellular Corp. is well-positioned to consider such an acquisition of properties, although an acquisition of this size would likely have a ratings impact.

Since VZW has already met with the DOJ that resulted in an offer to divest 85 markets, Fitch expects the DOJ will not require VZW to divest a material number of additional markets at the conclusion of its review. The FCC will also need to address the competitor concerns over roaming, which will have implications in the Verizon-Alltel review and will likely become a key negotiating item when determining further conditions associated with this transaction.

For more detailed information, the full report titled 'Event Risk Related to Verizon Wireless - Alltel Acquisition' can be found at www.fitchratings.com and located by clicking on Corporates under the Corporate Finance header and then clicking on special reports once in on the Corporates Home Page.

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