Rural Cellular claims Alltel sabotaged divestiture deal

Rural Cellular Corp. sued Alltel Corp. in federal court, accusing the Arkansas-based cellphone operator of undermining a $48 million wireless deal between the two companies.
RCC last year completed its purchase of several Minnesota markets from Alltel, a divestiture-related transaction required of the latter company as part of its 2006 purchase of Western Wireless Corp. After the deal became final following conditional approvals by the Federal Communications Commission and the Justice Department, according to the Minnesota-based rural wireless carrier, Alltel agreed to continue providing service to customers temporarily until they could be moved to RCC’s network and business systems. A deal RCC now says Alltel did not uphold.
“Contrary to its contracts with RCC, and in derogation of state and federal law, Alltel failed to secure customer data for RCC, improperly communicated with customers after the sale, and used the cover provided by the transitional period to surreptitiously use confidential and proprietary customer information to contact some of the sold customers, thereby converting them back into Alltel customers or causing them to terminate their relationships with RCC,” stated the lawsuit filed in the U.S. District Court for the District of Delaware.
In the lawsuit, RCC said Alltel’s misconduct has caused millions of dollars in damages. Separately, government officials are considering Verizon Wireless’ $2.67 billion bid for RCC.
“We have not been served with litigation papers, but we have obtained a copy of the complaint that was filed in Delaware,” said Andrew Moreau, an Alltel spokesman. “Rural Wireless alleges we acted improperly. We did not, and we are confident that we have very good defenses to the allegations set forth in the suit.”
Among RCC’s allegations in the lawsuit are:
–“Alltel sent branded ‘monthly billing stuffers’ to the sold customers in the divestiture market that lauded Alltel’s offerings on at least one occasion in the spring of 2007.”
–“Alltel sent a sales pitch in the form of a branded letter to the customers sold to RCC.”
–Alltel helped steer RadioShack Corp. away from transferring a valuable joint marketing alliance in southern Minnesota to RCC, even though RCC has such partnerships with the retailer in other parts of the country. “When RCC representatives traveled to Texas in an effort to persuade RadioShack to continue with the alliance in the divestiture market, they were told that Alltel representatives had told them how [to] terminate their relationship with RCC and return to Alltel after a 90-day period.”
–Alltel sales agents, based on feedback from new RCC customers and RCC employees, improperly obtained ‘point of sale’ access to information on sold customers in order to convince them to return to Alltel. RCC said when it objected, “Alltel cavalierly responded . with repeated assurances that all ‘point of sale’ access had been eliminated and that the contrary reports were false.”
–“Alltel provided slipshod and poor quality service to RCC’s customers during the transitional services period, resulting in poor or interrupted service to many customers in the divestiture market.”
–“Alltel provided incomplete or inaccurate information to RCC about the sold customers, leading to confusion or uncertainty in the market that Alltel capitalized on when soliciting customers to convert them back to customers of Alltel.”
–“RCC received information from its customers that suggested that Alltel retail locations had access to confidential and proprietary customer information and were misusing it, including for the purpose of having RCC’s customers migrate back to Alltel.”
–Without directly pointing a finger at Alltel, RCC said at the end of the cut-over, churn of sold customers in the divestiture market soared to 13%. Many customers ported back to Alltel, RCC claimed.