Wall Street Lines Up AT&T/T-Mobile Deal Winners & Losers: (T) (VZ) (AAPL) (ALU) (S) (CCI)

Last night, StreetInisder.com released its list of winners and losers from the AT&T (NYSE: T) mega-deal to acquire T-Mobile USA for $39 billion. Today, a number of Wall Street's finest have also weighed-in with their thoughts on the winners and losers. Below is a summary:

WINNERS:

• AT&T (NYSE: T) (Winner):

Wells Fargo: "If approved, we view this deal as an extremely positive one for our top pick AT&T. T's biggest need has been spectrum. With this deal, T essentially increases its spectrum position by about 50%. Spectrum is a finite asset. If this deal is approved, AT&T has found an immediate fix for what has proven to be a large overhang on its wireless operations."

Goldman Sachs: "AT&T has committed to a significant break-up fee, including $3 bn in cash plus certain spectrum rights. Perceived regulatory approval risks will be an overhang, in our view. AT&T looks to be offering regulators broadband expansion into rural areas."

• Verizon (NYSE: VZ) (Winner):

Wells Fargo: "Fewer competitors help rationalize the market and should allow for better pricing trends. We believe VZ will be well positioned to benefit from this distraction which likely will occur from T-Mo and T. We also believe VZ will be the likely beneficiary of possible concessions/divestitures which will have to be made by this deal."

Goldman Sachs "VZ is the peer best positioned to benefit from any uncertainty while the proposed deal is evaluated, while for the industry structural benefits could accrue longer-term."

• Apple (Nasdaq: AAPL) (Winner):

Wedbush: "We also see Apple benefiting at the expense of other device manufacturers as AT&T sells both the iPhone and iPad while T-Mobile does not."

• Alcatel-Lucent (NYSE: ALU) (Winner):

Jefferies: "We note that Ericsson and Nokia-Siemens are the dominant wireless infrastructure vendors at T-Mobile USA. Meanwhile, Ericsson and Alcatel-Lucent are the dominant vendors at AT&T Wireless. Our assumption is that, over time, Alcatel-Lucent (a domain vendor) would gain market share in the combined entity. Nokia-Siemens Networks would lose share. We assume that AT&T’s announcement of a LTE network expansion in concert with the deal would also be incrementally beneficial for Alcatel-Lucent and Ericsson. Over the intermediate term, of course, Alcatel-Lucent could get impacted by slowing infrastructure spending as the two sides complete the merger and integrate. Also, the incremental network efficiencies and capex savings associated with the deal could partly offset some of the potential market share gains the organization could get. We estimate that AT&T Wireless accounts for 5%+ of Alcatel-Lucent’s sales right now."

Deutsche Bank: “AT&T indicates it will spend $8bn in 'incremental' Capex and we believe over time AT&T's 4G/LTE equipment suppliers (ERIC & ALU in radio access, ALU in IP) should benefit from supplying equipment for AT&T's enlarged network. In the short-term there could be volatility in both T-Mobile's and AT&T's Capex due to merger planning and integration, although strong data trends in our view dictate a continuation of network and capacity upgrades in the mid-term.

• Tekelec (Nasdaq: TKLC) (Winner):

Jefferies: "We see Tekelec as an intermediate-term beneficiary of the deal. In prior mergers among major wireless operators (AT&T Wireless / Cingular, Sprint/Nextel), the company has benefitted from a significant increase in Signaling infrastructure purchases. We note that – once these deals closed – the operators built out their signaling networks such that subscribers from one carrier can roam onto the other carrier’s network and vice versa. As such, the operators can immediately get the network coverage benefits associated with the merger. We assume that the same thing will occur with the AT&T Wireless / T-Mobile deal. AT&T has historically been a 15-22% customer for Tekelec in recent quarters. T-Mobile, similarly, has been a 10% customer for the company from time to time."

• Atlantic Tele-Network (Nasdaq: ATNI) (Winner):

BWS Financial: "The acquisition of T-Mobile USA by AT&T (T) could have been the biggest value creator for Atlantic Tele-Network (ATNI) and its US wireless assets... Based on the value AT&T is paying for T-Mobile, we arrive at a valuation of $418.3 million to $823.3 million only for the Allied Wireless division. At the time of this report, ATNI’s total market capitalization was $521 million."

• Synchronoss Technologies, Inc. (Nasdaq: SNCR) (Winner):

Goldman Sachs :"while it generates revenues in online activations of T-Mobile devices indirectly through Brightpoint (CELL; Not covered) and OEMs, we believe that most of T-Mobile’s activation volumes are handled in-house. Given SNCR’s extensive relationship with AT&T, we believe this transaction could increase the prospects for SNCR to capture some of T-Mobile’s volume"

Wedbush: "Synchronoss appears to be the biggest beneficiary in our coverage universe as AT&T (53% of revenue) is its largest customer for activation and provisioning services while T-Mobile is not a customer."

• Amdocs Ltd. (NYSE: DOX) (Winner):

Goldman Sachs: "In the medium-to long-term we believe DOX could benefit from increased post M&A integration spend, as DOX currently handles core billing and managed services for wireless subscribers at both AT&T and TMobile. That said, there could be near-term disruptions to discretionary projects as AT&T assesses the combined application and infrastructure environment."

• Openwave (Nasdaq: OPWV) (Winner):

Wedbush: "Openwave sells its legacy gateway, directory, and some messaging products to AT&T but nothing to T-Mobile."

• Comverse Technology Inc. (OTC: CMVT) (Winner):

Wedbush: "Comverse sells voicemail and some unified messaging products to AT&T."

• Prepay Mobile Providers – MetroPCS (NYSE: PCS) and Leap Wireless (Nasdaq: LEAP): (Winner):

Wells Fargo: “In our view, the 7x+ multiple paid for the T-Mobile asset could bode well for both LEAP & PCS’ given current valuations (trading under 6x).”

LOSERS:

• Sprint (NYSE: S) and Clearwire (Nasdaq: CLWR) (Losers):

Goldman Sachs: This deal will likely be a negative for Sprint, as it was the company perceived to "need" a combination with TMobile more than any other. This also remove the other viable option that CLWR (Nasdaq: CLWR) had (T-Mobile).

Collins Stewart: "With this announcement it is clear that Deutsche Telekom (NYSE: DT) is not about to merge with Sprint (NYSE: S) (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 (Nasdaq: CLWR) spectrum that had actively been shopped.

Wells Fargo: “Longer term, this news represents a challenge for Sprint. The wireless model is very scalable and Sprint will now be a distant number 3 player to VZ. We believe Sprint has to look on its own partnerships with a renewed sense of urgency. In our view, a near-term move with CLWR likely will come about so as not to lose its 4G messaging and continue to differentiate its service offerings. Near term, we believe S is in a position to gain meaningful share from T-Mobile as it will likely continue to market around its best value offering. S could also be in a position to put regulatory pressure on and shift some of the hot button issues (i.e. special access) more in its favor.”

• Tower Stocks - American Tower Corp. (NYSE: AMT), Crown Castle International Corp. (NYSE: CCI), SBA Communications Corp. (Nasdaq: SBAC) (Losers):

Goldman Sachs: "The towers normally trade off on carrier consolidation, but we would note generally rebound quickly and AT&T has capex commitments in this deal that should protect the towers in terms of the carrier’s spending level."

• LM Ericson (Nasdaq: ERIC) (Loser):

Deutsche Bank: “We estimate T-Mobile US's Capex is $2.9bn p.a. or 12% of total US Tier 1 carrier Capex. The incumbent suppliers to TMOB are Ericsson & NSN in radio access and Tier 2 and 3 vendors in backhaul (we estimate ~70% is fibre/optical). It is likely that over time AT&T will integrate T-Mobile's cell sites into its own network and cut back spending on radio access and backhaul in areas with significant overlap.

• Nokia-Siemens (NYSE: NOK) (NYSE: SI) (Loser):

Jefferies: "Besides the long-term market share issue we highlighted above, we note that NSN is the major supplier of wireless infrastructure to LightSquared. That 4G network deployment, of course, is still getting off of the ground (many industry participants have concerns about the viability of the network). We note that LightSquared was pursuing a wholesaling strategy to other wireless operators without a 4G network plan. One of those prospective customers was TMobile USA. Now, in the wake of this deal, T-Mobile USA won’t require LightSquared’s services and the viability of Light Squared gets a bit more uncertain."

• Nokia (NYSE: NOK) (Loser):

Deutsche Bank: “ T-Mobile is currently Nokia's only significant carrier distributor of devices in the US. If AT&T were to change handset OEM procurement strategy for T-Mobile, this could potentially negatively impact Nokia's volumes into the US, although it is a small market for the company (3% unit share).”

Wedbush “We also see a slight negative impact for Nokia and RIM on the device front as the iPhone will likely take some share.”

• Research in Motion (Nasdaq: RIMM) (Loser):

Wedbush “We also see a slight negative impact for Nokia and RIM on the device front as the iPhone will likely take some share.”

• Neutral Tandem (Nasdaq: TDMN) (Loser):

Wedbush: "Neutral Tandem will likely see AT&T route T-Mobile calls to its own tandem switches in markets it has a presence."

• Nuance (Nasdaq: NUAN) (Loser):

Wedbush: “Nuance provides mobile care and has a good speech presence on T-Mobile devices while AT&T is starting to use more of its own speech software and Vlingo for speech application on mobile devices.”

• DirectTV (NYSE: DTV) and Dish Network Corp. (DISH) (Losers):

Credit Suisse: "For a number of years, there has been speculation that an RBOC (especially AT&T) would purchase one of the two US DBS players (DISH, DTV). With AT&T focused on purchasing and integrating T-Mobile, we think the likelihood of T buying a DBS asset in the near to mid term has declined. In turn, we believe that both DTV and DISH stock could show some weakness tomorrow." Maintain Outperform rating on DISH, Neutral rating on DTV.

• Convergys Corporation (NYSE: CVG) (Loser):

Goldman Sachs: "We see the transaction as a potential long-term headwind for CVG as it currently generates a material percentage of revenues from AT&T and a small percentage from T-Mobile mostly for customer support and call center work."

• RLECs - CenturyLink, Inc. (NYSE: CTL), Frontier Communications (NYSE:FTR), Windstream Corporation (NYSE: WIN) (Losers):

Goldman Sachs "As part of its $39 bn planned agreement to acquire T-Mobile USA, AT&T is committing to significantly expand its 4G LTE coverage. Previous plans included intentions to cover roughly 80% of the US. Under the proposed merger, AT&T intends to deploy to 95% of the US population, or 46.5 mn incremental pops. The increased coverage is expected to primarily target rural markets"

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