Canaccord Genuity Morning Coffee on AT&T (T), Verizon Communications (VZ) and Sprint Nextel (S): Creating A Monster
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Canaccord Genuity Morning Coffee on AT&T (NYSE: T), Verizon Communications (NYSE: VZ) and Sprint Nextel (NYSE: S): Creating a monster.
Canaccord analyst said, "Shares of AT&T got a boost after the company announced it would be acquiring T-Mobile USA from Deutsche Telekom (NYSE: DT) for $39 billion in cash and stock. The deal would be the largest merger so far in 2011 and would create the largest wireless service provider in the U.S., with over 130 million subscribers. AT&T would drop the T-Mobile name in the U.S., and it is estimated they will be able to cut costs by $40 billion, likely at the expense of some jobs. The proposed deal has been approved by both AT&T and Deutsche Telekom’s respective boards, but still requires the approval of regulators, which AT&T executive John Stephens believes will be obtained. There is a $3 billion break-up fee, payable to Deutsche Telekom if the deal does not go through and Sprint is already speaking out against the proposed merger. Sprint says that after the acquisition AT&T and Verizon will make up over 80% of the wireless market, creating a duopoly that will hurt their ability to compete. Sprint had also been rumoured as a potential suitor for T-Mobile, sending its shares up about 12% so far this year, gains which were quickly eliminated by the AT&T announcement. There had been rumblings that Verizon would acquire Sprint if Sprint was unable to obtain T-Mobile, but many analysts do not believe this is likely, instead seeing Sprint purchasing smaller prepaid companies as it attempts to turn its business around. The market has viewed the deal as a positive for not only AT&T but Verizon as well. The two largest wireless carriers had recently been hammered by T-Mobile advertising claiming superior coverage and faced significant pricing pressure from T-Mobile’s low cost offerings."
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Canaccord analyst said, "Shares of AT&T got a boost after the company announced it would be acquiring T-Mobile USA from Deutsche Telekom (NYSE: DT) for $39 billion in cash and stock. The deal would be the largest merger so far in 2011 and would create the largest wireless service provider in the U.S., with over 130 million subscribers. AT&T would drop the T-Mobile name in the U.S., and it is estimated they will be able to cut costs by $40 billion, likely at the expense of some jobs. The proposed deal has been approved by both AT&T and Deutsche Telekom’s respective boards, but still requires the approval of regulators, which AT&T executive John Stephens believes will be obtained. There is a $3 billion break-up fee, payable to Deutsche Telekom if the deal does not go through and Sprint is already speaking out against the proposed merger. Sprint says that after the acquisition AT&T and Verizon will make up over 80% of the wireless market, creating a duopoly that will hurt their ability to compete. Sprint had also been rumoured as a potential suitor for T-Mobile, sending its shares up about 12% so far this year, gains which were quickly eliminated by the AT&T announcement. There had been rumblings that Verizon would acquire Sprint if Sprint was unable to obtain T-Mobile, but many analysts do not believe this is likely, instead seeing Sprint purchasing smaller prepaid companies as it attempts to turn its business around. The market has viewed the deal as a positive for not only AT&T but Verizon as well. The two largest wireless carriers had recently been hammered by T-Mobile advertising claiming superior coverage and faced significant pricing pressure from T-Mobile’s low cost offerings."
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