AT&T completes acquisition of Centennial - Puerto Rico

Published: Friday, November 6, 2009 13:32 (GMT -0400)

By Patrick Nixon / Business News Americas

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AT&T Mobility (NYSE: T) has finally completed the acquisition of wireless and broadband provider Centennial Communications, which operates in the US, Puerto Rico and the US Virgin Islands, AT&T said in a statement.

The news follows an announcement last month that the US justice department had cleared the US$945mn merger that was agreed upon in November 2008.

The acquisition enhances AT&T's network coverage across the US midwest and southeast, as well as in Puerto Rico and the US Virgin Islands, and will allow AT&T to deliver broader wireless coverage to approximately 893,000 former Centennial wireless subscribers, AT&T said.

"The addition of Centennial will enhance AT&T's assets in wireless - a strategic priority and one of our biggest growth drivers - and service for customers of both companies," Ralph de la Vega, CEO of AT&T Mobility and Consumer markets said.

In the mainland US, AT&T will rebrand Centennial as AT&T and extend their product portfolio to Centennial customers.

In Puerto Rico, the Centennial brand will continue through mid-2010. AT&T will honor current rate plans and contracts and it expects to make the full portfolio of its products and services available in Puerto Rico in 3Q10.

At that point, Centennial customers will have the opportunity to migrate to AT&T rate plans without activation or upgrade fees.

A spokesperson for AT&T told BNamericas that the acquisition enhances AT&T's assets in two areas overall, which are mobility and the enterprise business. In Puerto Rico Centennial also has wireline assets and an undersea cable.

The spokesperson pointed out that as Centennial has concentrated on high value postpaid customers, the addition of those customers will add a lot of value to AT&T's subscriber profile. AT&T has the largest WiFi network in the US, which will benefit Centennial customers, the spokesperson said.

"And in terms of enterprise customers it will give AT&T an opportunity to bring its services to them and to better serve our multinational corporation customers who have operations in Puerto Rico," the spokesperson said.

AT&T plans to deploy 3G at more than 200 sites in Centennial's markets. This deployment plan includes adding 3G capabilities at more than 100 sites and expanding 3G coverage and capacity at approximately 100 sites.

AT&T is in the process of rolling out HSPA 7.2 technology before its deployment of 4G LTE service.

The spokesperson said that deployment of HSPA 7.2 would begin in 2009 with coverage going first to Charlotte, Los Angeles, Dallas, Chicago, Houston and Miami. By 2Q10 the technology will be deployed in 25 of the top 30 markets in the US, and in 2011 AT&T expects to cover 90% of its 3G footprint with HSPA 7.2.

As regards LTE, AT&T has said trials are set to begin in 2010 and a commercial rollout will commence in 2011.

José Otero, president of Signals Telecoms Consulting underscored the importance of the acquisition for AT&T given that Centennial is not only a mobile operator in Puerto Rico but also the main competitive exchange carrier, that competes with the incumbent PRT.

"This acquisition not only increases AT&T's subscriber base on the island but also provides the operator with a state of the art fixed network as well with important clients in the transport business," Otero said.

"Nevertheless, there's a clear difference in the two companies' culture and market approach. This could hurt Centennial's client base post-acquisition as it's highly likely that the technology migration towards GSM/UMTS is not as seamless as AT&T would desire," Otero said.

The acquisition of Centennial will provide AT&T with opportunities for synergies in areas such as corporate functions, advertising, customer care and network operations, AT&T said.

Including net debt, the transaction is valued at $2.7bn.

To secure FCC approval of the transaction, AT&T committed to honoring agreements for roaming on Centennial's network. The telco also agreed to certain measures restricting the flow of competitive information between AT&T and América Móvil (NYSE: AMX).

AT&T is a minority shareholder in América Móvil, which provides telecommunications services in Puerto Rico through incumbent telco PRT.

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