Alltel eyeing T-Mobile?

Steve Rosenbush

Credit analyst Dave Novosel of Gimme Credit raised the idea today that Alltel might want to make a move on T-Mobile USA after it completes its acquisition of Western Wireless sometime this summer. People familiar with the matter say Alltel isn't in the process of making a move on T Mobile USA, and that it isn't likely to contemplate any more deals until the Western Wireless acquisition is behind it.

Nonetheless, BusinessWeek correspondent Brian Grow, who covers Alltel from Atlanta, says people familiar with the company acknowledge that there would be certain synergies in an Alltel-T-Mobile combination. Western Wireless CEO John Stanton sold VoiceStream to Deutsche Telekom, and it's now the backbone of T-Mobile USA. Stanton is joining the Alltel board, putting him in a position to wield influenece over both companies.

There are some hurdles, though. T-Mobile and Alltel use different kinds of wireless technology, although that might not make such a difference in the long run, as wireless companies rebuild their networks for faster data services.

A deal would transform Alltel, which has been a regional phone company in the South, into a truly national player. It would be a fourth national carrier, facing titans Verizon Wireless, Cingular and Sprint-Nextel. T-Mobile has positioned itself as a bargain brand. That's unlikely to remain a long-term strategy for Alltel, though. If it does make a move on T-Mobile, it would probably need to do even more deals and invest heavily in technology to compete head-on with rivals in the U.S. market. Alltel remains a company to watch.