AT&T will pay $780 million in cash to acquire Atlantic Tele-Network Inc's U.S. retail wireless operations operating under the Alltel brand, AT&T said on Tuesday, announcing a move aimed at boosting its service in rural areas.
Atlantic Tele-Network shares rose 11 percent after the news was announced on Tuesday.
The Alltel brand serves about 585,000 customers in mostly rural areas in the states of Georgia, Idaho, Illinois, North Carolina, South Carolina and Ohio. AT&T said the spectrum it is buying is complementary to its current network.
It said it does not expect the deal to result in "significant" dilution to earnings per share or hurt cash flow.
After AT&T's bid to buy Deutsche Telekom unit T-Mobile USA for $39 billion failed in late 2011, the company has sought other ways to meet growing demand for data services from smartphone users by expanding spectrum holdings to improve network capacity.
AT&T expects the deal, which is subject to review by the U.S. Federal Communications Commission and the Justice Department, to close in the second half of the year.
After the sale, Atlantic Tele-Network will have still have telecom operations in the U.S. Southwest, New England, New York State, Guyana, Bermuda and portions of the Caribbean islands.
In August, AT&T agreed to buy NextWave Wireless Inc for $50 million and $550 million in debt assumption.
On January 17, AT&T said it will take a fourth-quarter charge of about $10 billion due to bigger-than-expected pension obligations. It also expects to take a $175 million reduction in operating income because of infrastructure damage inflicted by storms including Superstorm Sandy.
Shares of Atlantic Tele-Network rose $4.34 or 11 percent to $43.71 in morning trade on Nasdaq. AT&T shares rose 4 cents to $33.48 on New York Stock Exchange.