AT&T is buying smaller GSM operator Centennial Communications for $944 million in cash, the company said late last week.
The addition brings 1.1 million customers and fortifies AT&T’s coverage in rural parts of the Midwest, Southeast and in the Caribbean. The deal is subject to regulatory approval and should be complete in the second quarter of 2009, officials said.
When shopping to expand, there weren’t many companies left for AT&T to acquire. Verizon Wireless picked up Alltel, while T-Mobile would probably meet government objections because of its size. Most other U.S. carriers are based on CDMA networks.
Centennial announced a first-quarter profit of $7.5 million ($0.07 per share) last month.
“They’ve been on the market for years,” but probably had a high asking price, industry analyst Roger Entner said, of Nielsen-IAG Research.
However, industry consolidation may still occur among CDMA operators. Leap Wireless and MetroPCS will probably merge, Entner predicted. U.S. Cellular may also be an acquisition target, he said.