AT&T Wireless Group announced it entered agreements with Verizon Wireless to acquire wireless systems in San Diego, San Francisco and Houston for approximately $3.3 billion.
“This is a critical move that gives us three systems … which cover a population of approximately 15 million. These are the last three cities in the nation’s top 15 wireless service markets that don’t have AT&T-branded wireless service, and we are delighted to include them in our coverage area,” said John Zeglis, chairman and chief executive officer of AT&T Wireless Group.
Zeglis also said he anticipates a major reduction in roaming expenses, as well as additional revenue growth by several factors.
In San Francisco, AT&T Wireless is acquiring the remaining interest it doesn’t already own from Vodafone AirTouch plc. In San Diego, AT&T Wireless said it is buying all of the operations owned by GTE Corp. AT&T Wireless will buy all of PrimeCo Personal Communications L.P.’s operations in Houston, although Verizon Wireless said it will retain 10 megahertz of personal communications services spectrum there.
“The Houston and San Diego markets will need to transition customer phones because the network is CDMA (Code Division Multiple Access),” said Mohan Gyani, president of AT&T Wireless. He said AT&T Wireless is considering offering an incentive or a subsidy to entice customers to change out their current handsets.
Prior to this acquisition, AT&T Wireless owned 53 percent of San Francisco and 55 percent of a competing system in Houston. BellSouth Cellular owns the other portion of that system-which is operated under the Houston Cellular brand-and is expected to exercise its right to exit its partnership with AT&T under terms of their previous agreement, and purchase the entire system outright, said James Peterson, spokesman for AT&T Wireless
The deals are expected to close by the end of the year, although the markets most likely will close at different times, AT&T Wireless said.
Transition costs are predicted to be between $280 million and $300 million, and approximately 1,400 employees will join AT&T Wireless as a result of the transactions.
