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Verizon In Talks To Buy Alltel

NEW YORK (Reuters) – Verizon Wireless is in talks to buy rural mobile service provider Alltel Corp for about $27 billion in debt and cash to create a company that would overtake AT&T Inc as the No. 1 U.S. mobile service, a sources familiar with the talks told Reuters on Wednesday.

While the details of the deal were still being worked out one person who asked not to be named said that the $27 billion valuation could be comprised of mostly debt and a smaller amount of cash. Alltel had $23.35 billion in long-term debt on its balance sheet at the end of the first quarter.

The ownership structure of Verizon Wireless — 55 percent owned by Verizon Communications Inc and 45 percent owned by Vodafone Group Plc — would not change under the deal the person said.

Verizon, shares of which fell 2 percent to $36.60 after the news, declined to comment on the matter. Alltel representatives were not immediately available for comment.

Verizon Wireless and Alltel, which said it had more than 13 million customers at the end of the first quarter, together would have more than 80 million customers.

Alltel was sold to private equity firms TPG Capital and GS Capital Partners for $71.50 per share on November 16.

(Reporting by Sinead Carew, Paritosh Bansal and Ritsuko Ando;

editing by John Wallace and Gerald E. McCormick)