Financing Costs Put Alltel in the Red, Despite 10% Increase in Revenue

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Financing Costs Put Alltel in the Red, Despite 10% Increase in Revenue

6:10 am on August 15, 2008 | Category: Business, Corporate

Regional wireless operator, Alltel Corp., which is currently in the process of being acquired by Verizon Wireless, has reported second-quarter losses of $70 million due to interest, amortization, and other costs after being acquired by private equity investors last year.

The company reported an encouraging 10% increase in gross revenue, however, earning $2.39 billion in the second quarter of this year.

TPG Capital and Goldman Sachs Capital Partners, the private equity firms that purchased Alltel last year, took on an estimated $23 billion in debt to finance the $24.7 billion acquisition.

Verizon has agreed to pay $28.1 billion for Alltel, including the assumption of $22 billion in remaining debt.

If regulators allow the Verizon-Alltel merger to go through, the equity investors will have made a healthy return-on-investment, despite financing costs.