AT&T Buys Alltel US For $780M

NEW YORK ( TheStreet) - AT&T ( T) has announced a deal to purchase Atlantic Tele-Network's ( ATNI) Alltel U.S. operations for $780 million.

Under the terms of the deal, AT&T will acquire the company's retail wireless operations in this country, which includes nearly 600,000 paying customers and, more importantly, a whole bunch of spectrum. Alltel currently has chunks of the 700, 850 and 1900 MHz cellular frequencies.

Alltel reportedly covers nearly 4.6 million people in a number of primarily rural areas in Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina.

That's the good news. But, there's a slight catch. While the 850 and 1900 MHz bands are compatible with current AT&T operations, Alltel uses the CDMA data standard, while AT&T's nationwide network uses GSM technology. According to the press release:

"AT&T expects that as it upgrades the network, ATNI customers and existing AT&T customers who roam in these areas will enjoy an enhanced mobile Internet experience."

That also means that current Alltel customers should expect to purchase new GSM-based handsets in the near future.

AT&T says it expects the integration of Alltel services "will not result in a significant dilution to EPS or impact cash flow."

Pending the FCC review, AT&T hopes to complete the deal later this year.

--Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's senior technology correspondent.