Verizon Wireless Needs More Time to Sell Cellular Markets
Verizon Wireless asked the FCC for another 60 days to complete the sale of 105 markets it agreed to divest when it acquired Alltel last year. But to win approval for its request, Verizon Wireless needs sign-off by a very different commission than the one that approved the merger in November. Two of the three current commissioners, Michael Copps and Jonathan Adelstein, expressed deep reservations about the deal at the time of its approval.
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The sales are supposed to be complete May 9 under the FCC order, but the carrier said it needs more time to complete what is “by far” the company’s largest sale of assets since it was formed in 2000. Verizon Wireless cited economic concerns. The carrier said it’s seeking a similar extension from the Department of Justice, which also required market divestitures before okaying the merger.
“Verizon Wireless recognizes the importance of divesting the Divestiture Assets to the ultimate buyer(s) as soon as possible and is working expeditiously to accomplish that goal,” the company said in an FCC filing. “Although the company has diligently managed the divestiture process, the sheer size and complexity of the divestitures coupled with the current economic conditions have forced bidders to conduct far more due diligence than usual. This has made it impossible to complete the divestitures within the initial 120-day period.”
Verizon Wireless said it “recognized the complexity of the anticipated divestiture process well before the order was adopted.” In August, the company hired Morgan Stanley and sent a preliminary overview of the divestiture assets and a non-disclosure agreement to prospective buyers, the company said. In November, it released a 200-page confidential information memorandum that detailed the assets in each market to be divested. In December, Verizon Wireless opened an online data room and held day-long management meetings with potential bidders. In January, the company provided bid procedures, a draft acquisition agreement, and a draft transition services agreement to prospective purchasers, followed by a draft roaming agreement in February and auditable financials in March.
“In total, Verizon Wireless signed nondisclosure agreements with over 70 prospective buyers and answered hundreds of due diligence questions posed by the bidders,” the carrier said. “Verizon Wireless requested that bids be submitted by the end of March. While Verizon Wireless received a variety of bids, some of the leading bids were contingent on additional due diligence and data requests, which the company has been responding to expeditiously. Verizon Wireless is in discussions with some of the bidders, but it will not be able to complete the process and submit the requisite applications by the end of the 120-day period specified in the Verizon Wireless/ALLTEL Order.”
Meanwhile, we've learned, the FCC may consider an order clarifying that Verizon Wireless’s commitment to extend the duration of Alltel roaming agreements for up to four years applies to terms and conditions in the agreements as well as rates.