Meteor parent bought for US$6bn

10 Jan 2005

Western Wireless, the parent of Irish mobile operator Meteor, has been acquired for US$6bn by US communications giant Alltel in a cash and stock transaction. The deal will make the combined company the fifth largest wireless operator in the US, covering 25pc of America’s population and serving some 10 million existing customers.

Alltel will also have 1.6 million international wireless customers in six countries – including Ireland. The combined company will have nearly US$10bn in annual revenues and operating income before depreciation and amortisation of nearly US$4bn.

Alltel is a communications player in the US with some 13 million customers and US$8bn in annual revenues, providing wireless, local telephone, long-distance, internet and high-speed data services to residential and business users in 26 states.

The transaction will require approval of Western Wireless shareholders and various regulatory authorities and it is expected to close by mid-year 2005.

Meteor, which finally began operating in Ireland three years ago after a two-year delay caused by Orange’s decision to sue the regulator over the awarding of Ireland’s third GSM licence to Meteor, missed out on the watershed years of mobile penetration in Ireland, which currently stands at 89pc of the population. As a result, the company has been struggling to break out of its minimal share of a market dominated by O2 and Vodafone. However, market developments such as number portability and the signing of roaming deals have enabled Meteor to grow its market share from 3pc to 6pc of the marketplace in just over a year.

Last year John Stanton, chairman of Western Wireless, during a visit to Dublin reaffirmed his company’s commitment to the Irish operation by insisting that Meteor would gain the lion’s share of an annual US$40m investment in development based on its ability to generate cash and grow market share.

“The wireless industry is gravitating swiftly to a smaller number of large national and regional players,” said Stanton, chairman and CEO of Western Wireless. “The combination of Western Wireless with Alltel creates a rural operator using multiple technologies with the largest footprint in the country. We believe that combining forces is in the best interests of our shareholders, customers and employees. We are confident in the future of Alltel and look forward to becoming a major shareholder in this exciting company.”

In recent months, local Meteor management have denied rumours that incumbent fixed-line operator Eircom was in the running to buy the mobile operator as part of its ambitions to return to the mobile market. The company has also denied rumours of the possibility of hosting Eircom as a mobile virtual network operator on its network.

By John Kennedy