Collins Stewart on Telecom Services: AT&T (T) - T Mobile USA Thrwarts Sprint (S)
T Hot Sheet
Rating Summary:6 Buy, 16 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 8 | New: 25
Collins Stewart on Telecom Services: AT&T (NYSE: T) - T Mobile USA Thrwarts Sprint (NYSE: S)
Collins analyst says, "With the proposed merger that would result in AT&T to have 129 million wireless subscribers, or roughly 43% of US total, we expect the most obvious call by everyone will be that the deal is likely to face stiff FCC and maybe even DOJ opposition. With the release of the FCC authored US Mobile Wireless Competition report in May of 2010, the agency effectively labeled the state of competition in the US Wireless market place as declining. However, the agency has separately noted the need for carriers to have additional spectrum as well as the need to serve rural areas with wireless broadband."
"Not great news for Sprint (NYSE: S), Clearwire (Nasdaq: CLWR) or LightSquared - With this announcement it is clear that Deutsche Telekom (NYSE: DT) is not about to merge with Sprint (as many had recently speculated) or even create a network sharing agreement that would lower the costs of their respective 4G deployments. Although the announcement clearly pushes Sprint and Clearwire closer together, making Sprint appear more expensive (nearly 8.0x 2012 Est. PF EBITDA), we also note that it likely eliminates a likely wholesale customer or even purchaser of the 20Mhz of Clearwire spectrum that had actively been shopped. For LightSquared, it simply eliminates the single most likely anchor tenant for its yet-to-be built wireless network which could jeopardize its entire business model. In the near-term, we expect virtually no impact upon Verizon but over time the lower levels of competition should make this proposed merger a net positive for its shareholders."
"Negative for American Tower (NYSE: AMT), Crown Castle (NYSE: CCI) and SBA (Nasdaq: SBAC) - Although the merger of two wireless carriers with a common technology (GSM based) represents an unambiguous negative for the tower stocks in that investors will expect at least some of the 40k + cell sites to be rationalized, it is important to note that because T-Mobile USA’s 3G spectrum runs on the AWS frequency while AT&T’s runs on a combination of 1900 and 850 Mhz. Therefore, even if contracts allowed, we would expect the same cell site rationalization that we witnessed during the Cingular (BellSouth – SBC Communications) merger with AT&T Wireless – slow and simply not noticeable in the financials of the tower stocks. With AT&T’s commitment to a rural broadband build out, we expect SBA Communications should have the least adverse (and possible positive) impact."
Discover Wall Street's best ratings calls with the pros - Ratings Insider Elite. Free Trial!
Collins analyst says, "With the proposed merger that would result in AT&T to have 129 million wireless subscribers, or roughly 43% of US total, we expect the most obvious call by everyone will be that the deal is likely to face stiff FCC and maybe even DOJ opposition. With the release of the FCC authored US Mobile Wireless Competition report in May of 2010, the agency effectively labeled the state of competition in the US Wireless market place as declining. However, the agency has separately noted the need for carriers to have additional spectrum as well as the need to serve rural areas with wireless broadband."
"Not great news for Sprint (NYSE: S), Clearwire (Nasdaq: CLWR) or LightSquared - With this announcement it is clear that Deutsche Telekom (NYSE: DT) is not about to merge with Sprint (as many had recently speculated) or even create a network sharing agreement that would lower the costs of their respective 4G deployments. Although the announcement clearly pushes Sprint and Clearwire closer together, making Sprint appear more expensive (nearly 8.0x 2012 Est. PF EBITDA), we also note that it likely eliminates a likely wholesale customer or even purchaser of the 20Mhz of Clearwire spectrum that had actively been shopped. For LightSquared, it simply eliminates the single most likely anchor tenant for its yet-to-be built wireless network which could jeopardize its entire business model. In the near-term, we expect virtually no impact upon Verizon but over time the lower levels of competition should make this proposed merger a net positive for its shareholders."
"Negative for American Tower (NYSE: AMT), Crown Castle (NYSE: CCI) and SBA (Nasdaq: SBAC) - Although the merger of two wireless carriers with a common technology (GSM based) represents an unambiguous negative for the tower stocks in that investors will expect at least some of the 40k + cell sites to be rationalized, it is important to note that because T-Mobile USA’s 3G spectrum runs on the AWS frequency while AT&T’s runs on a combination of 1900 and 850 Mhz. Therefore, even if contracts allowed, we would expect the same cell site rationalization that we witnessed during the Cingular (BellSouth – SBC Communications) merger with AT&T Wireless – slow and simply not noticeable in the financials of the tower stocks. With AT&T’s commitment to a rural broadband build out, we expect SBA Communications should have the least adverse (and possible positive) impact."
Discover Wall Street's best ratings calls with the pros - Ratings Insider Elite. Free Trial!
You May Also Be Interested In
- Compass Point Maintains a 'Neutral' on UDR, Inc. (UDR); Raising PT, But Lowering Estimates
- Compass Point Maintains a 'Neutral' on PNC Financial (PNC); RBC Addition Positive Offset By Increased Competition in C&I Lending
- Barclays maintains an 'Equalweight' on Tech Data (TECD); Slight Adjustments on Q1 Results
Create E-mail Alert Related Categories
Analyst CommentsRelated Entities
Collins StewartSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
