Verizon Wireless said on Thursday it would buy rural mobile phone service provider Alltel Corp for $28.1 billion, including debt, which would vault it to first place in the U.S. market ahead of AT&T Inc. Under the deal, Verizon Wireless would acquire the equity of Alltel for $5.9 billion and take on an estimated $22.2 billion in debt, mostly incurred when Alltel was taken private in November in a leveraged buyout by TPG Capital and Goldman Sachs Group Inc's GS Capital Partners.

Verizon Wireless said the deal would create savings of $1 billion in the second year after closing, which is targeted for the end of 2008, pending regulatory approval. It forecast total savings of more than $9 billion by 2011, driven by reduced capital and operating expenses.