Alltel to go mum on CenturyTel offer, releases 3Q results

Alltel’s (www.alltel.com) soap-opera-like pursuit of CenturyTel (www.centurytel.com) appears to be on hold, for the time being. Since Alltel’s initial offer in mid-August, the bickering between the two carriers created drama for the rest of the industry to observe during the third quarter.

Last week Alltel released its 3Q01 results. Scott Ford, Alltel president & COO, acknowledged the carrier’s acquisition-proposal faces an uphill battle with CenturyTel’s board. Ford put the ball in CenturyTel’s court, leaving it for them to do with what they will.

“To date, the CenturyTel board has been unwilling to enter into merger negotiations with us, and while we do not understand the economics of such a decision, we fully recognize their right to make it,” Ford said. “Nonetheless, our offer will remain outstanding for the time being and we will not comment further on this topic until we have something else to report.”

Alltel may move on from its failed courtship of CenturyTel. “We will continue to focus on growing our communications business internally and through acquisitions,” Ford said. “Our balance sheet is strong, and we are in a good position to take advantage of the many opportunities that are developing as the communications industry continues to consolidate and realign.”

For the third quarter, Alltel pulled in 600,951 gross wireless customer additions. Throw in the carrier's 2.42% churn, and the carrier acquired 124,273 net additions. To acquire each new wireless customer, Alltel spent $304, an $11 dip from 3Q00. ARPU was $47.36, down from $49.81 in 3Q00. Jeff Gardner, Alltel senior vice president & CFO, attributed the 5% ARPU decline to the final reduction of roaming rates with Verizon Wireless (www.verizonwireless.com). Gardner also said the carrier had a $9 million non-cash charge for network upgrades in acquired markets in preparation for Alltel’s transition to 1XRTT.

“We expect an additional and final charge of $5 million dollars in the fourth quarter, as we complete this upgrade,” Gardner said. “After these upgrades, our wireless network will easily be transitioned to 1XRTT.”

For the fourth quarter, Alltel also expects wireless subscriber gross additions between 600,000 and 640,000, with churn to fall between 2.4% and 2.5%.