DALLAS (AP) -- AT&T Inc. said Tuesday that it has reached a deal to buy remnants of the Alltel wireless network for about $780 million to boost its spectrum holdings in rural areas.
The Dallas-based phone company is buying the licenses, retail stores and network assets, along with about 585,000 subscribers, from Atlantic Tele-Network Inc. The news sent the Beverly, Mass.-based company's shares up $4.73, or 12 percent, to $44.10 in late afternoon trading. AT&T shares added 30 cents to $33.74.
The network, operated under the Alltel brand, covers about 4.6 million people in mainly rural areas across six states — Georgia, Idaho, Illinois, North Carolina, Ohio and South Carolina. It generated revenue of about $350 million for the first nine months of 2012.
Alltel was a wireless network that operated in 34 states until it was bought by Verizon Wireless in 2009. Federal regulators made Verizon sell off parts of the network to AT&T and ATN.
Analyst Christopher King at Stifel Nicolaus observed that ATN bought its six-state holdings for $223 million in 2010, meaning it more than tripled its money in three years.
AT&T said it expects that as it upgrades the network in the acquired areas, mobile Internet service will improve for both Alltel and AT&T customers. However, it will need to convert the cell towers from the "CDMA" technology Alltel uses to the "GSM" technology AT&T's network uses. That means Alltel subscribers will need new phones.
The deal remains subject to approval by the Federal Communications Commission and Department of Justice. The companies said they expect the deal to close in the second half of the year.
AT&T said it doesn't expect the cost of buying and integrating Alltel to significantly affect its earnings or cash flow.