Verizon Wireless announced Thursday that it has entered into an agreement to acquire Alltel for US$5.9 billion, plus the assumption of debt, in a deal that will create the biggest mobile phone company in the U.S.

Based on Alltel's projected net debt at closing of $22.2 billion, the aggregate value of the deal is $28.1 billion, Verizon said. The merger should be complete by the end of the year, pending regulatory approvals, Verizon said.

Verizon said the acquisition will give users access to an expanded range of products and services.

Alltel has more than 13 million mobile phone customers in 34 states, including 57 primarily rural markets that Verizon Wireless does not serve. The merger will give Alltel customers access to next-generation wireless services that Verizon is rolling out, the companies said in a news release.

Alltel's customers will also be able to take advantage of Verizon Wireless' Open Development initiative, which will allow customers to bring outside wireless devices and applications onto the Verizon network, Verizon said.

"This move will create an enhanced platform of network coverage, spectrum and customer care to better serve the growing needs of both Alltel and Verizon Wireless customers for reliable basic and advanced broadband wireless services," Lowell McAdam, Verizon Wireless' president and CEO, said in a statement.

Ivan Seidenberg, Verizon Communication's CEO and chairman, called the merger a "perfect fit."

Verizon Wireless expects to cut costs by more than $9 billion through the merger, the company said in a news release. The cost savings are expected to reach $1 billion in the second year after closing, Verizon said.