Nov. 4 (Bloomberg) -- The Federal Communications Commission, kicking off a new round of telephone-industry consolidation, approved Verizon Wireless's $28.1 billion purchase of Alltel Corp. and a deal between Sprint Nextel Corp. and Clearwire Corp.

The commission voted 5-0 to give conditional clearance to the Alltel acquisition, requiring Verizon to sell network operations in 105 markets where its service overlaps with Alltel's. The FCC also voted unanimously to support Sprint's plan to merge a high-speed wireless network with Clearwire.

Both deals will improve wireless services for consumers, FCC Chairman Kevin Martin said today. The Alltel purchase, which would vault Verizon Wireless past AT&T Inc. as the biggest U.S. mobile-phone company, will fill gaps in Verizon's coverage, especially in rural areas. The Clearwire agreement helps create a new source of wireless Internet access, he said.

The accord will ``solidify wireless as an additional broadband platform,'' said Martin, a Republican. WiMax networks can transmit data to laptops and mobile phones up to five times faster than current technology.

The Justice Department approved the Alltel acquisition last week, on the condition that Basking Ridge, New Jersey-based Verizon Wireless sell assets in 100 markets. FCC support was the transaction's final regulatory hurdle.

Fewer Disruptions

Verizon had told the FCC that the deal would prevent disruptions in roaming agreements both companies have with smaller wireless providers. Verizon offered to preserve roaming rates under Alltel's existing deals with carriers for four years or the full length of the contracts, whichever is longer.

The FCC's order includes the four-year commitment. The panel's three Republicans rejected a push by Democratic commissioners Michael Copps and Jonathan Adelstein to require Verizon to freeze roaming rates for seven years.

Verizon Wireless plans to pay $5.9 billion in cash for Alltel and assume $22.2 billion in debt. Goldman Sachs Group Inc. and TPG Inc., the sellers, bought Little Rock, Arkansas-based Alltel last year in a leveraged buyout valued at $24.7 billion.

Verizon Communications Inc., which owns Verizon Wireless with Vodafone Group Plc, gained $1.86 to $32.61 at 4 p.m. in New York Stock Exchange composite trading. The shares have declined 25 percent this year.

Sprint rose 9.2 percent to $4.53 in extended trading after the FCC's announcement. The shares, down 68 percent this year, climbed 15 cents to $4.15 in regular trading. Clearwire advanced 6.1 percent to $10.45 in late trading after closing at $9.85 on the Nasdaq Stock Market. Its shares have dropped 28 percent this year.

New Company

Sprint announced its deal on May 7, proposing to create a new company out of Kirkland, Washington-based Clearwire and its WiMax network business. Intel Corp., Comcast Corp., Time Warner Cable Inc., Bright House Networks and Google Inc. will invest $3.2 billion, or about $20 a share, in the new business. The final price, adjusted to account for trades in the new Clearwire's common stock, will be between $17 and $23.

The funding will help the network reach as many as 140 million people by 2010. Sprint will keep working on the WiMax expansion this year, and Clearwire will reimburse Sprint for some of those costs, Chief Executive Officer Dan Hesse said in May.

Sales at Sprint, based in Overland Park, Kansas, have declined the past four quarters. The venture may give Hesse a new way to hang onto customers. Competitors have taken 3.5 million of Sprint's contract wireless subscribers in the past two years.

Cash Flow

The arrangement also lets Sprint, which will own more than half the new Clearwire business, scale back its own WiMax spending and focus on improving cash flow. The company ranks behind AT&T and Verizon Wireless in U.S. mobile-phone customers.

``It offloads some of the capital requirements,'' while still letting Sprint share in any success the venture might have, said Will Power, an analyst at Robert W. Baird & Co. in Dallas. He has a neutral rating on Sprint shares and doesn't own them.

Still, Sprint will be one of the few companies backing WiMax technology, which may limit its growth in the U.S., said Jennifer Fritzsche, an analyst at Wachovia Securities Inc. in Chicago. AT&T and Verizon are supporting networks that use the Long-Term Evolution, or LTE, standard.

``It's somewhat of an island technology,'' said Fritzsche, who rates Sprint shares ``outperform'' and doesn't own any. It would be preferable to have a format with more industry support, she said.

To contact the reporter on this story: Molly Peterson in Washington at mpeterson9@bloomberg.net; Amy Thomson in New York at athomson6@bloomberg.net

Last Updated: November 4, 2008 18:18 EST