Verizon fights AT&T with buyout of Rural Cellular
updated 02:35 pm EDT, Mon July 30, 2007
Verizon and Rural Cellular
Verizon today announced that it would buy out Rural Cellular for $757 million, bringing all the customers of the smaller provider into the larger carrier's fold. The move gives the larger carrier access to 716,000 new subscribers and should help the company provide service in large portions of the northeast as well as the south, north-central, and northwestern US, many of whom either have few choices in carriers or are serviced by rivals. Most of Rural Cellular's subscribers use GSM phones but will eventually be converted to CDMA networks, Verizon said. However, all the GSM networks will remain active to provide roaming for customers of AT&T, T-Mobile, and other providers based on the competing standard.
While expensive, the buyout effectively recoups about $1 billion by wiping out the costs associated with letting Verizon subscribers roam on outside networks, Verizon added. Although the deal will require government approval before it can take effect, the carrier expects its takeover of Rural Cellular to be greenlighted within the first half of 2008.
Verizon's acquisition comes just weeks after AT&T purchased Cellular One with a similar goal of expanding its customer base and delivering extra coverage.
