Thursday, December 8, 2005

Alltel Spins Off Wireline Business and Merges It with VALOR

Alltel will spin off its wireline business and merge it with VALOR Communications Group, creating a major wireline operator focused on the rural U.S. market. The deal was valued at about $9.1 billion. The following are the highlights for the combined wireline business:

  • Revenues and operating income before depreciation and amortization (pre-synergy) for the last 12 months ending Sept. 30, 2005, were $3.4 billion and $1.7 billion, respectively. The company will have about 3.4 million customers in 16 states.

  • The company expects to gain $40 million in net annual synergies from the combination.

  • The company expects to pay an annual dividend of $1 per share of common stock, which equals $1.05 per equivalent Alltel share.

  • The combined company will have net debt of about $5.4 billion.

  • Alltel's wireline business will keep the majority of communications support services, including publishing, IT outsourcing services, retail long distance and the wireline sales portion of communications products.

Alltel will reposition itself as a pure-play wireless service provider with roughly 11 million customers in 34 states. Here are the highlights for the wireless business:

  • Alltel will remain the nation's fifth-largest wireless carrier. Revenue and operating income before depreciation and amortization for the last 12 months ending Sept. 30, 2005, were $7.5 billion and $2.6 billion, respectively, pro forma to include Western Wireless and Midwest Wireless.

  • Alltel will own and operate the nation's largest wireless network covering a population of 75 million with its 850 MHz business. Alltel also will remain the largest independent roaming partner to the top four wireless carriers.

  • Alltel expects to receive cash proceeds and debt reduction totaling about $4.2 billion resulting from the spin-off.

  • Alltel plans an open market $3 billion share repurchase program for the two years following the spin-off. The company also plans to implement a $1 billion debt-reduction program.

  • The wireless business expects to pay an annual dividend of 50 cents per share of common stock.

  • After the spin-off, Alltel will have net debt of about $1.2 billion and be levered at about 0.5 times net debt to operating income before depreciation and amortization, prior to the planned repurchase program.

Alcatel and KT Enter WiMAX Partnership

Alcatel and KT will establish a new center in Seoul, Korea, that will serve as a venue for conducting interoperability tests of WiBro/mobile WiMAX (IEEE 802.16e) infrastructure with WiMAX-enabled devices and to showcase WiMAX technology.

Alcatel said it is convinced that mobile WiMAX has enormous potential and decided to partner with KT to accelerate the introduction of new mobile broadband services in the global marketplace.

For the new WiMAX center, Alcatel will provide the radio access and core network elements for this WiBro/mobile WiMAX reality center, and will integrate this equipment with a set of application platforms that will be used to test applications with local 3rd party developers. The center will be linked to the KT R&D Center to facilitate testing of the convergence of fixed and mobile broadband applications and to evaluate the experience of end-users. A team of Alcatel and KT's engineering and marketing staff will work together within this framework.

Prior to this cooperation, Alcatel and KT have already taken a number of important steps in developing broadband wireless solutions. Earlier this year, KT announced that it would introduce KT Wireless Broadband services in the first half of 2006 that will enable users to access the Internet with a mobile device at multi-megabit speeds anywhere and at anytime.

Yahoo! Partners with Seven in Australia & NZ

Yahoo! and Seven Network, one of Australia's leading media companies, will form a 50-50 joint venture media company focused on the delivery of relevant content across a number of delivery platforms in Australia and New Zealand. Yahoo! Australia & NZ and Seven will be combining their online teams and are expected to launch a new name and an exciting online presence in late January, coinciding with Seven's coverage of the Australian Open and the Olympic Winter Games in Torino, as well as the opening weeks of the 2006 television season. The vision for the combined teams is to create the best entertainment, information and communications experience for Australian internet and mobile users.
  • Seven is the largest television company in Australia reaching 74 per cent of the market through its owned and operated television stations, and 98 per cent of Australians through its owned and operated stations and affiliate agreements. Seven's publishing company - Pacific Magazines - is the second largest magazine company in Australia, with a 21 per cent share of the magazine market.

Portugal's Novis Selects Amino for IPTV Rollout

Novis, a major Portuguese telco, selected Amino's miNET110 set-top boxes for its IPTV launch in Lisbon and Porto this month. The service will include an electronic programme guide (EPG), Video on Demand (VOD), and a personalised choice of channels.

Novis is offering 50 channels for the test launch, increasing to 100 when the commercial deployment commences. The AmiNET110 is compatible with the ReadyLinks Smartfoot and Coaxsys home networking adapter.

AT&T Selects 2Wire Residential Gateway for U-verse

AT&T awarded a $43 million, one-year contract to 2Wire to supply its new IP-based residential gateways for the forthcoming AT&T U-verse suite of services.

AT&T said the residential gateway device will create a home network that delivers IP-based services throughout the home - IP-based video, high-speed Internet access and, eventually, VoIP.

Specifically, AT&T plans to use the 2Wire HomePortal 3000 series, which supports fiber-to-the-premises and VDSL. The residential gateways support multimedia coaxial networking within the home for distribution of bandwidth-intensive applications, such as high-definition video, over existing home wiring. The gateways come equipped with an integrated wireless access point, remote management capabilities, and advanced security features such as a professional grade firewall and automatic wireless security.

"The residential gateway plays a significant role in ensuring customers have access to IP-enabled services throughout the home and on various IP-enabled devices," said Lea Ann Champion, senior executive vice president, in charge of operations for AT&T Project Lightspeed.

In September 2005, the AT&T companies, formerly the SBC Communications Inc. family of companies, announced an agreement with Motorola and Scientific-Atlanta to provide set-top boxes for AT&T U-verse TV. These set tops will connect to the residential gateway to deliver the IP video to TVs.
  • Earlier this month, Alcatel agreed to acquire a 25% percent stake in 2Wire, a developer of home broadband network equipment. In addition, AT&T and Telmex have also agreed to acquire minority interests in 2Wire from 2Wire's existing shareholders. Alcatel said the strategic partnership broadens and extends its end-to-end, fully integrated triple play solution.

BellSouth Endorses IPTV A La Carte Programming Model

BellSouth announced its endorsement of the "a-la-carte" video programming model recently endorsed by FCC Chairman Kevin Martin and some Members of Congress. In a statement, Herschel Abbott, BellSouth vice president governmental affairs, said:

"IPTV, which can be delivered over phone lines, fundamentally is about offering consumers competitive choice in video programming. Currently, one of the most significant business obstacles new competitive entrants face in offering innovative technologies like IPTV is the existing local franchising process and lack of a streamlined franchising framework.

"But as we contemplate the future of our video business, we are fully supportive of Chairman Martin's call for a la carte and family friendly programming tiers. IPTV holds much promise for the consumer and greater programming options is just one example of how consumers will benefit by having choice in video service providers. As long as content can be acquired in a manner that allows flexibility, we would look forward to meeting the needs of our customers with even more choice through a la carte and family-tiered offerings."

BellSouth Teams With 8x8 for Residential VoIP

BellSouth will begin offering a residential Digital Phone Service based on 8x8's VoIP platform. This includes a suite of VoIP service components including a call switching platform, feature servers, customer portals and consumer premise equipment. Financial terms were not disclosed.