Alltel Might Purchase Western Wireless

Alltel Corp., the nation’s sixth-largest wireless company, may buy Western Wireless Corp. for $4 billion to break into Western states and narrow a gap with rivals that are growing through mergers, people familiar with the matter said Thursday.

The combined company would have revenue of about $10 billion and 9.8 million wireless subscribers across the U.S., or almost 6% of the market. Western Wireless, which hasn’t had an annual profit since 2000, sells mobile calling in 19 states -- including California -- under the Cellular One brand.

A deal with the Bellevue, Wash.-based company would let Alltel sell service in states such as California and Minnesota, where it doesn’t operate, and bolster subscriber rolls in areas including Texas. Alltel needs to speed growth as bigger companies Cingular Wireless and Sprint Corp. make purchases to add subscribers and plug network-coverage holes.

“From a geographic and scale perspective, it’s a pretty smart move for Alltel,” said Michael Mahoney, who helps manage $300 million at San Francisco-based EGM Capital.

Talks between Alltel, based in Little Rock, Ark., and Western Wireless are advanced and an agreement may be reached next week, according to a report in the New York Times.

Alltel spokesman Andy Moreau declined to comment. Karen Clark, an assistant to Western Wireless Chief Executive John Stanton, said the company wouldn’t respond. Co-Vice Chairman Donald Guthrie and spokesman Steve Winslow didn’t return calls.

Western Wireless shares added $4.70 to $35.70 in Nasdaq trading after rising as high as $37. The stock gained 60% last year. Alltel dropped $2 to $56 on the New York Stock Exchange and rose 26% in 2004.

Alltel offers wireless, local-phone and other communication services in 26 states, mainly in the Southeast and Midwest.