Three US telecommunications companies have entered final negotiations to acquire a collection of local telephone access lines from Alltel, the Arkansas-based wireless group, for as much as $10bn.

According to people familiar with the matter, Citizens Communications of Connecticut, CenturyTel of Louisiana, and Valor Communications of Texas, are competing to acquire the business, which Alltel is hoping to sell in the coming weeks.

A deal would most likely be structured as a “Reverse Morris Trust”, in which Alltel would first spin off the access lines, and subsequently have them acquired by the preferred bidder in an all-stock transaction.

Alltel shareholders would retain a stake in the sold business.

Over the summer, Alltel decided to hire bankers at JPMorgan and Merrill Lynch to explore the disposal of its access lines through a spin-off or a sale.

Although a sale now appeared to be the most likely outcome, no final decision had been taken, said people who are close to the company.

With the January acquisition of Western Wireless for $4.5bn, and last week’s purchase of MidWestern Wireless for $1.1bn, Alltel has made a push to focus on the faster-growing wireless segment.

That has left questions surrounding the fate of its local telephone business, which comprises about 3m customers in a number of states in the US Midwest.

Alltel’s purchases have come at the end of a string of dealmaking that has reshaped the US telecoms industry since Cingular Wireless agreed to buy AT&T Wireless for $41bn in cash in February 2004.

This year, Verizon bought MCI, the long-distance carrier, while SBC Communications acquired AT&T and took its name.

Along with the sale or spin-off of Alltel’s local telephone business, investment bankers and other advisers operating in the media and telecoms industries are closely watching developments at Walt Disney.

The California-based media conglomerate is in the coming weeks expected to sell its ABC radio unit to one of among a handful of buyers, including Cumulus Media of Georgia, Entercom Communications of Pennsylvania and Emmis Communications of Indiana.

The deal is likely to have a similar structure as the one contemplated by Alltel.

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