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AT&T acquisition to beef up 3G coverage in rural US

AT&T on Friday confirmed plans to acquire wireless properties from rival Verizon in a bid to strengthen coverage of its 3G network in rural areas of the US stretching across some 18 states.

The deal for $2.35 billion in cash will see the exclusive US iPhone carrier take control of 18 of the 24 markets that Verizon is divesting as part of its recent acquisition of Alltel Wireless, which helped the telecommunications firm snatch the title of the largest US wireless carrier away from AT&T.

More specifically, Friday's agreement will see AT&T acquire wireless properties, including licenses, network assets and 1.5 million current subscribers in 79 service areas, primarily in rural areas of Alabama, Arizona, California, Colorado, Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Tennessee, Utah, Virginia and Wyoming.

"Wireless continues to be AT&’s greatest growth driver, and this transaction will complement our existing network coverage, particularly in rural areas," said AT&T chief executive Ralph de la Vega. "The acquisition will add network assets, distribution channels and 850 MHz spectrum in a significant portion of the U.S., enabling even better coverage for AT&T’s subscribers in those areas."

Converting those markets from Verizon’s CDMA network to GSM technology and transitioning operations to AT&T is expected to take about 12 months and cost about $400 million. Once the transition is complete, subscribers in those areas will be able to take advantage of AT&T's 3G network and supporting devices like the iPhone and BlackBerry Bold.

AT&T told investors the deal is expected to deliver substantial long-term stockholder value. It's the latest move on the part of the Dallas-based company to build out its mobile data services, which represent its key area of growth. In 2008, AT&T pumped more than $15 billion into building out its wireless network.