Alltel, or as it was once known more or less fondly in these parts, Allied Telephone Co., will soon be no more. By year’s end, the big company that got its impetus from Jacksonville at the end of World War II will have been gobbled up by Verizon, the New Jersey-based communications giant, and the familiar logo will disappear, apparently even from the face of the big arena in North Little Rock to which the company bought naming rights.
Verizon’s acquisition of the 60-year-old company for a reported $28.1 billion is the business news of the year in Arkansas and it was treated, as these things ordinarily are, as a bonanza for the state, or at least a mixed blessing. Gov. Beebe welcomed Verizon to the state and hoped it would make use of all the fine Arkansas employees. The Arkansas Economic Development Commission and the Little Rock Regional Chamber of Commerce applauded the sale.
Scott Ford, the young Alltel president who will be leaving as soon as the sale is final, put a sunny face on it — it’s a transition, not a funeral, he said. He speculated that Verizon could decide to make this a regional headquarters. Ford expected the vast majority of the 3,000 workers in the county to be affected hardly at all, at least right away. The corporate executives, he suggested, will be the ones sharply affected. But we need not mourn their fate too much. Ford and the other top executives worked out contracts last year that will pay their salaries for three years (Ford’s is $1.23 million a year) plus bonuses in the event the company is sold. We won’t be seeing them at the soup kitchens.
For everyone else, the future is bleak to uncertain. Here’s a clue. A Verizon statement said the company expects to “realize synergies with a net present value, after integration costs, of more than $9 billion driven by reduced capital and operating expenses.” Incremental cost savings of $1 billion will be generated the second year after closing. How do you save operating and capital expenses? One way is to eliminate jobs, somewhere. Our guess would be central Arkansas. This is the second sale of Alltel in a year. The company’s sale to the private equity firms TPG Capital and GS Capital Partners was final in November, but the banks that financed the transaction could not sell the notes to investors in the collapsing credit markets. Verizon sort of came to the rescue and bought the debt at a discount. The equity that it acquired was only $5.9 billion of the deal. We have a hunch that might be a factor in Verizon’s decision about where to effect the synergies that it talks about.
This will no longer be the world headquarters of one of the leading innovation companies in the land, and we will all be a little poorer for that. Arkansas has more than its share of corporate titans that grew from one man’s vision and grit and incubated in poor towns. Wal-Mart is the archetype, but the story of Alltel is just as inspiring as Sam Walton’s rags-to-riches legend.
Brothers-in-law Hugh R. Wilbourn Jr. and Charles B. Miller quit their jobs with Bell Telephone in 1943 and contracted to help the tiny independent telephone companies around the state repair and modernize their lines and exchanges. Then they bought a little company at Sheridan that strung its wires along fence posts and hardwood saplings. Witt Stephens, the utility and financial baron, sold it to them on credit on condition they keep his mother in telephone service at Prattsville free of charge.
Their big break came a year or so later when Sen. John L. McClellan telephoned the Department of Defense and arranged for the transfer of tons of surplus communications equipment at the government’s Jacksonville ordnance plant along with the little telephone exchange for the community around the Army’s World War II training base, all at a discounted bargain. Miles of copper cable and communications gear at the Jacksonville and Maumelle ordnance depots that had been gathered for the war effort enabled the two men to cheaply modernize the service in Grant and northern Pulaski County and a growing number of tiny rural telephone companies that the two men were acquiring around the state. Wilbourn’s son-in-law, Joe Ford (father of the current CEO), took over in the 1970s and spread its network across the country, including pioneering in wireless communications.
An economist at the University of Arkansas, Kathy Deck, explained what the sale really means, regardless of what happens ultimately to the thousands of good employees of the company and to the gleaming Alltel campus on the south bank of the Arkansas River:
“When you have a nationally recognized company’s headquarters in your area, that is very important for the overall branding of your area. It’s really hard to replace them in the public consciousness and in terms of the leadership that they bring to community organizations, even to further economic development in the state.”
So Hugh Wilbourn’s great creation vanishes into the corporate ether, but he is not around to mourn it. He died seven years ago.
