Merger Mania: FCC OKs Verizon-Alltel, Sprint-Clearwire

With the merger, Verizon becomes the largest wireless carrier in the U.S. Under financial terms of the deal, Verizon is acquiring Alltel for $5.9 billion plus the assumption of $22.2 billion in debt.

The Verizon-Alltel agreement was first announced in June. The deal was pretty much sealed last week after FCC discussions but not voted on until Tuesday.

Under the FCC ruling, the merger was granted on certain conditions that Verizon had agreed to earlier. Verizon Wireless, a joint venture between Verizon Communications and Vodafone Group in the U.K., agreed to a requirement to divest overlapping areas, numbering more than 100. To meet the requirement, Verizon is selling its assets in 22 states.

In addition, the FCC required that Verizon Wireless has to honor Little Rock, Ark.-based Alltel's existing roaming agreements for four years—whether contracted with it or Alltel. The requirement, said Commissioner Deborah Tate, is intended to alleviate concerns from midsize, small and rural providers that there are too few roaming providers using CDMA technology and the proposed merger would even further reduce this number.

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In the Sprint-Nextel and Clearwire merger, the companies' licenses will be transferred to the newly created entity, New Clearwire.

The FCC said it expects the merger will further the buildout of a nationwide WiMAX-based network that will lead to increased competition, greater consumer choice and new, wireless services.

The FCC said in a statement that it conditioned its approval on Sprint Nextel's compliance with a voluntary commitment to phase out its requests for federal high-cost universal service support over a five-year transition period and with a voluntary commitment to use counties for measuring compliance with the FCC's wireless E911 location accuracy rules governing handset-based technologies.

"Today's action paves the way for Sprint, Clearwire and other investors to partner to deploy a nationwide wireless broadband network in the 2.5GHz band, something that these companies have not been able to accomplish individually," said Commissioner Robert McDowell in a statement.