AT&T to buy rural rival Centennial for $944 million

Randall L. Stephenson, CEOAT&T Inc. said late last night that it plans to buy regional wireless provider Centennial Communications Corp. for $944 million in an all-cash deal, in a bid to expand its reach.

The deal marks the latest consolidation amid a wave of mergers in the rural telecoms industry, which is struggling with slower wireless growth and declining home phone lines in a weak economy.

Including debt, the deal puts an enterprise value on Centennial of $2.8 billion. It and AT&T already have a roaming partnership, where AT&T customers could roam on Centennial's network in areas where AT&T did not have coverage.

This move comes after rival Verizon received approval from the Federal Communications Commission (FCC) and the US Justice Department for its proposed $28 billion acquisition of Alltel, on the condition that Verizon shed some of its current coverage areas first. This deal would effectively propel Verizon past AT&T as the number one US wireless carrier in terms of subscribers. (See: Verizon Wireless signs $28.1-billion acquisition agreement for Alltel

CenturyTel Inc also announced a deal last month to buy rival rural phone company Embarq Corp for $5.8 billion in stock, and assumed an equivalent amount in debt, for an enterprise value of $11.6 billion. (See: CenturyTel acquires Embarq for $11.6 billion in all-stock deal)

AT&T said in a prepared statement that acquiring Centennial will improve "coverage for customers in largely rural areas of the Midwest and Southeast United States," as well as in Puerto Rico and the US Virgin Islands.