ACQUISITIONS

9 Months Ended

Sep. 30, 2011

ACQUISITIONS

ACQUISITIONS

4.  ACQUISITIONS

Alltel Wireless

On April26, 2010, the Company completed its acquisition of wireless assets (the “Alltel Acquisition”) from Cellco Partnership d/b/a Verizon Wireless (“Verizon”). Pursuant to the Purchase Agreement, Verizon contributed certain licenses, network assets, tower and other leases and other assets and certain related liabilities to its wholly-owned subsidiary limited liability company, whose membership interests were acquired by the Company’s subsidiary, Allied Wireless Communications Corporation (“AWCC”).

The Company funded the purchase price of $221.4 million, which included the purchase of $15.8 million of net working capital, as defined in the agreement, with $190.0 million of borrowings from its credit facility and $31.4 million of cash-on-hand.

The Alltel Acquisition was accounted for using the purchase method and AWCC’s results of operations since April26, 2010 have been included in the Company’s U.S. Wireless segment as reported in Note 10. The total purchase consideration of $221.4 million cash was allocated to the assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition as determined by management. The table below represents the assignment of the total acquisition cost to the tangible and intangible assets and liabilities of AWCC based on their acquisition date fair values:

Total cash consideration	$	221,359
Purchase price allocation:
Net working capital	$	15,817
Property, plant and equipment	176,393
Customer relationships	55,500
Telecommunications licenses	44,000
Trade name license	13,400
Other long term assets	11,500
Other long term liabilities	(34,211		)
Deferred tax liabilities	(18,016		)
Non-controlling interests	(16,000		)
Net assets acquired	$	248,383
Gain on bargain purchase, net of deferred taxes of $18,016	$	27,024

The gain related to the Alltel Acquisition was a result of a bargain purchase generated by the forced divesture of the assets that was required to be completed by Verizon within a required timeframe to a limited class of potential buyers that resulted in a favorable price to the Company for these assets. This gain, recognized on the bargain purchase, was included in Other Income in the Company’s results during the second quarter of 2010.  In connection with the Alltel Acquisition, the Company incurred $15.8 million of external acquisition-related costs during the nine months ended September30, 2010 relating to legal, accounting and consulting services. The weighted average amortization period of the amortizable intangible assets (customer relationships and trade name license) is 12.7 years.

The Company completed the transition of its Alltel customers to its own information technology and customer service platforms in July2011 and as a result, eliminated most of the duplicate costs associated with the migration in the third quarter of 2011.

Merger with M3 Wireless, Ltd.

On May2, 2011, the Company completed the merger of its Bermuda wireless operations, Bermuda Digital Communications, Ltd. (“BDC”), with that of M3 Wireless,Ltd. (“M3”), a wireless provider in Bermuda (the “CellOne Merger”).  As part of the CellOne Merger, M3 merged with and into BDC, and the combined entity will continue to operate under BDC’s CellOne brand.  As a result of the CellOne Merger, the Company’s 58% ownership interest in BDC was reduced to a controlling 42% interest in the combined entity.  Since the Company has the right to designate the majority of seats on the combined entity’s board of directors and therefore controls its management and policies, the Company has consolidated the results of the combined entity in its consolidated financial statements effective on the date of the CellOne Merger.

The CellOne Merger was accounted for using the purchase method and M3’s results of operations since May2, 2011 have been included in the Company’s Island Wireless segment as reported in Note 10. The total consideration of the CellOne Merger was allocated to the assets acquired and liabilities assumed at their estimated fair values as of the date of the CellOne Merger as determined by management. The consideration paid for M3 was determined based on the estimated fair value of the equity of M3.  The table below represents the assignment of the total consideration to the tangible and intangible assets and liabilities of M3 based on their merger date fair values (in thousands):

Total consideration	$	6,655
Purchase price allocation:
Net working capital	$	675
Property, plant and equipment	10,577
Customer relationships	2,600
Telecommunications licenses	6,100
Goodwill	3,105
Note payable- affiliate (see Note 6)	(7,012		)
Other long term liabilities	(200		)
Non-controlling interests	(9,190		)
Net assets acquired	$	6,655

The amortization period of the customer relationships is 12.0 years.  Revenues and net income for M3 since the completion of the merger were immaterial to the Company’s consolidated financial statements.  The value of the goodwill, which was generated in Bermuda, a non-taxable jurisdiction, from the CellOne Merger can be attributed to a number of business factors including, but not limited to, the reputation of M3 as a retail provider of wireless services and a network operator, M3’s reputation for customer care and the strategic position M3 holds in Bermuda.

The following table reflects the unaudited pro forma results of operations of the Company for the three and nine months ended September 30, 2010 and 2011 as if the Alltel Acquisition and the CellOne Merger had occurred on January1, 2010 (presented in thousands, except per share data):

	ThreeMonthsEndedSeptember30, 2010				Nine MonthsEndedSeptember30, 2010
	As Reported		As Adjusted		As Reported		As Adjusted
Revenue	$	204,960	$	209,809	$	424,480	$	693,223
Net income	6,365		6,475		35,174		52,214
Earnings per share:
Basic	$	0.41	$	0.42	$	2.30	$	3.41
Diluted	0.41		0.42		2.27		3.37

	ThreeMonthsEndedSeptember30, 2011				Nine MonthsEndedSeptember30, 2011
	As Reported		As Adjusted		As Reported		As Adjusted
Revenue	$	194,346	$	195,840	$	576,253	$	582,341
Net income	11,336		11,309		17,648		$	18,183
Earnings per share:
Basic	$	0.74	$	0.73	$	1.15	$	1.18
Diluted	0.73		0.73		1.14		1.17

The unaudited pro forma data is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the Alltel Acquisition and the CellOne Merger had been consummated on this date or of future operating results of the combined company following this transaction.