Alltel launches DISH, assesses fate of wireline group

Alltel today announced that is now offering DISH Network satellite TV service as part of a bundle that includes its voice and broadband offerings in 15 states. Service bundles and pricing will vary by market.

Additionally, the company launched a new awareness drive and ad campaign including a promotion in which it’s giving away a media room makeover valued at $25,000.

The announcement comes one day before what many believe will be a spin-off of the company’s wireline assets into a separate entity. Alltel shares are surging today, up $1.29 to $59.79 at midday.

The company said early this year that it was assessing options for its wireline group, which could include a spin-off. Should the company go through with a spin-off, it would be the second large independent telco to do so. As part of its merger with Nextel, Sprint is creating a separate entity for its local wireline group that also will include Sprint North Supply.

Another option would be for Alltel to put its wireline group on the auction block, something one source says is not likely.

“The problem with them trying to sell [the wireline assets], is there’s no one out there that could buy,” the source said. “It’s just too expensive.”

Perhaps the largest lingering question with regards to a spin-off would be the financial structure of the new company. Several independents including Iowa Telecom, Citizen Communications and FairPoint Communications have re-spun their capital structure to include large dividends. Occasionally but not always, that structure can lead to a downgrade in bond ratings.

At the Goldman Sachs Global Investment Research Communacopia XIV Conference last month, Alltel CEO Scott Ford said any spin-off of the wireline group would be done in a manner that it could maintain investment-grade ratings on its debt.