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Ford: Alltel tried in vain to buy competitors before sale Sunday, Jun 22, 2008 By Jason Wiest Arkansas News Bureau LITTLE ROCK - Knowing its long-term existence hinged on a national platform, Alltel Corp. tried in vain numerous times to acquire competitors Sprint, T-Mobile and AT&T Wireless as a public company before it was eventually acquired by Verizon Wireless, CEO Scott Ford says. In an exclusive interview last week with Arkansas News Bureau columnist and Talk Business host Roby Brock, Ford disclosed publicly for the first time the acquisition strategy the Little Rock-based telecom followed as a means of positioning itself at once for both survival and growth. "We tried to buy Sprint three times, we tried to buy AT&T Wireless, we tried to buy T-Mobile," Ford said. "Some of those times we went with partners, some of those times we didn't. We were doing everything we could to get to a national platform." Negative events in the business environment denied Alltel the opportunity, he said. "The credit markets fell apart and Sprint fell in the tank almost right on cue, but they fell so, they fell so totally apart that there wasn't really an opportunity to go get them either," Ford said. Verizon's acquisition of Alltel, announced June 5 and expected to close toward year's end, has caused trepidation among Alltel employees and Arkansas officials as hundreds of jobs hang in the balance. But Ford also said during the interview that employees' careers might not be entirely in Verizon's hands. He and Gov. Mike Beebe are working on a sequel, Ford said. "If Verizon doesn't need them over the next 12 and 18 and 24 months, as people rotate out of Verizon, (Little Rock) would be a great place if you are an entrepreneur and you needed talented IT, marketing, finance, engineering people," he said. "This would be a great place to have a shop so you can tap into that resource pool." Verizon is said to be considering maintaining a call center in Little Rock and possibly locating a regional headquarters, unlike a corporate headquarters, at Alltel's campus overlooking the Arkansas River. Many Arkansans with corporate functions with Alltel could be forced to move or lose their jobs. After the announcement, Ford took a few days off and met with Beebe to discuss in depth ways to turn the loss of Alltel, a company deeply rooted in the state, into a positive for the community. Ford's thought is to try to attract venture capital to the state to harness the abilities of Alltel's work force, which owners TPG Capital and GS Capital Partners tabbed the premier company among their portfolios worldwide, Ford said. The possibilities include attracting high-tech, knowledge-based companies from the coasts, he said. "No promises," Ford said. "I don't know if it will come about or not," noting Arkansas' 7 percent income tax tends to deter venture capital to surrounding states, "but that's one of the things I'm working on." Beebe said through spokesman Matt DeCample that he was glad to meet with Ford and is grateful that he still wants to help the state. Ford said he thinks it's entirely possible. "Right now, because we've done the right thing for our shareholders, we have the ability to raise some money," he said. "People would bet on our management team." Ford said he knew he headed a talented group of about 3,000 employees in Central Arkansas that ran the nation's fifth-largest wireless telephone company and was capable of gobbling up a larger competitor and going toe-to-toe with the industry giants. The step also was necessary for the firm's long-term survival, Ford said. Without a national platform dictated by the industry's economies, Alltel would be subject to sub-optimal returns and possibly negative returns. But the advent of the credit crunch tightened access to capital, making it more difficult for Alltel to acquire Sprint. Around the same time, Sprint's problems integrating Nextel into its business began to surface, making a deal less attractive anyway. Alltel also found itself on the ropes after it failed to acquire any spectrum in the Federal Communications Commission's 700 megahertz wireless spectrum auction dominated by AT&T and Verizon, Ford said. The company's ability to compete for spectrum was vastly limited because the FCC decided not to set aside spectrum for non-national players, he said. If Alltel did not have to compete with AT&T and Verizon for any spectrum that it hoped to get, it would have changed the playing field, Ford said. Instead, Verizon won a large portion of the spectrum, bidding $9.4 billion for a large piece that contains the C-block, which carries open-access stipulations. "When they owned the 700 MHz across the spectrum ... the game had changed and we figured that ... we might end up doing something with one of the four in the three-to-five year time frame irrespective of the spectrum acquisitions, but it worked out so well for them that they decided to accelerate it," he said. Ford said Verizon made a smart move, and that selling Alltel was also the right decision, albeit a painful one. "Your shareholders are twice removed, you know, and they're not going to send you a thank you note, and they're not going to say well done," Ford said. On the other hand, there's a personal connection with company employees and customers as well as the Little Rock community, he said. But the company's duty is still to its shareholders. "Now a lot of people in this town wish I'd not gotten that right," Ford said. "I understand that and there's part of me, just, you know, private citizen, that looks at it and says, 'You know, this is a terrible loss for Little Rock, if we lose 1,000 jobs or 1,500 jobs and a corporate headquarters.' "That's a real blow and I hate that," Ford said. "I hate that as much or more than anybody." ------- On the Net: A full transcript of Roby Brock's exclusive interview with Scott Ford is available at talkbusiness.net. |
