AT&T (T) CEO Rejects Higher Price Theory in T-Mobile Deal

Assertions by AT&T Inc (NYSE:T) detractors coming as a result of the bid of the company for T-Mobile, saying it will result in higher prices, was argued against by AT&T CEO Randall Stephenson

Speaking at an event in New York sponsored by the Council on Foreign Relations, Stephenson cited a government report which stated prices over the last 10 years have dropped about 50 percent after the merger of five wireless companies during that time.

Another argument he used was concerning AT&T customers themselves, which had paid in the past about $1.90 a megabyte of wireless data, which has been whittled down to close to 16 cents at this time.

AT&T offered $39 billion to Deutsche Telekom AG's T-Mobile USA unit, which is the fourth-largest in the country, and is a low-price leader.

AT&T closed Wednesday at $30.71, gaining $0.66, or 2.20 percent.

AT&T (T) Faces Divestitures in T-Mobile Deal

Facing scrutiny and some opposition from competitors, AT&T (NYSE:T) CEO Randall Stephenson said he expects to have to divest of some of the assets they get when they acquire T-Mobile.

Included in the divestiture will be some of the wireless spectrum and customers that come with the company.

“We anticipate there will be some markets we will have to divest,” Stephenson said.

"AT&T’s plan to buy T-Mobile from Deutsche Telekom AG for $39 billion is expected to face heavy scrutiny from regulators and opposition from consumer-advocacy groups and competitors. Rivals Sprint (NYSE:S) and Clearwire Corp. (NASDAQ:CLWR) have been vocal about the alleged harmful impact of the deal," said Marketwatch.

Verizon Wireless (NYSE:VZ) Chief Executive Dan Mead previously said his company sees an opportunity to potentially scoop up some divested assets.

This is how Sprint and Clearwire need to view the potential transaction, not from a place of weakness where all they attempt to do is stop the deal from going forward.

AT&T was trading at $30.89, gaining $0.84, or 2.80 percent, as of 1:19 PM EDT.

Sprint (S) Value So Low Must Merge

After the offer by AT&T (NYSE:T) for T-Mobile, it appears that Sprint Nextel Corp. (NYSE:S) has been put in the postiion where it must make a merger deal with someone.

Sprint’s 11 percent plunge to $4.49 after the announcement of the T-Mobile USA deal has left its stock trading below the company’s $4.87 a share in assets minus liabilities. That means investors can now buy Sprint for 92 cents on the dollar, cheaper than 99 percent of companies in the Standard & Poor’s 500 Index excluding financials, according to data compiled by Bloomberg. Sprint’s licenses from the U.S. Federal Communications Commission, which give it the right to operate its network in specific regions, alone are worth $19.9 billion, 46 percent more than its market capitalization of $13.6 billion, the data show.

AT&T’s purchase of T-Mobile USA from Deutsche Telekom AG (DTE) will give the combined company more than double the customers of Sprint, while Verizon Wireless has almost twice the market share. To boost value, Overland Park, Kansas-based Sprint may buy the remaining stake in partner Clearwire Corp. (CLWR) or another carrier such as MetroPCS Communications Inc. (PCS), according to Dan Hays, a director at consultancy PRTM. It may also become a target for Verizon as carriers that run on the same network technology are forced to combine, he said.

“Someone, whether it’s Sprint or Verizon (NYSE:VZ), is going to have to serve as a catalyst for the consolidation,” said Washington- based Hays, who specializes in telecommunications. “What’s clear is that they can’t all afford to remain independent.”

Sprint closed Wednesday at $4.49, up $0.02, or 0.45 percent.



Source

Sprint's (S) Future Bleaker with AT&T (T) Deal

If the bid by AT&T for T-Mobile from Deutsche Telekom AG (NYSE:DTE) is allowed to go forward, the future of Sprint (NYSE:S) is much bleaker and more challenging, as it would fall to an even weaker No. 3 position.

Shares of Sprint had been trading down by about 17 percent in earlier trading, and closed down well over 13 percent on the day, as implications of the deal for Sprint hit investors.

With the takeover announced yesterday, AT&T would become the largest U.S. mobile-phone company. The deal still needs regulatory approval. Sprint also held talks with Deutsche Telekom about buying T-Mobile, people with knowledge of the matter said this month.

By acquiring T-Mobile, Sprint would have gained ground on larger rivals Verizon Wireless (NYSE:VZ) and AT&T. Now, AT&T could leave Sprint as a far weaker No. 3 player in the industry, said Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York.

“A Sprint deal is now off the table and Sprint is left to go it alone,” Moffett said in a research note today. The AT&T deal, if approved, makes Sprint’s prospects “decidedly worse,” he said.

Moffett cut his rating on Sprint to “underperform” and lowered his price estimate for the stock to $3 from $5, saying the company is worth about $9.2 billion. Moffett estimates Sprint’s operations are worth $22.2 billion and that the net value of its non-operating assets, including debt, cash and a stake in Clearwire Corp. (NASDAQ:CLWR), is negative $13 billion.

Sprint closed Monday at $4.36, falling $0.69, or 13.61 percent.

Sprint (S) Getting Bullish Option Action

Option traders continue to pour their money into Sprint (NYSE:S), believing the company still has plenty of upside to go.

"The activity is a continuation of a pattern that began on Feb. 23 when investors snapped up the May 4.50 calls for $0.20 to $0.23 and the May 5s for $0.08. The shares have been climbing since, and those calls have now appreciated by more than 100 percent and 250 percent," according to optionMONSTER.

"Today traders purchased more than 20,000 May 6 calls for $0.08 against open interest of just 3,751 contracts. The May 5s and April 5s are also seeing buying activity, though volume remains below open interest in the strike. Overall calls have outnumbered puts in the name by a bullish ratio of 7 to 1 so far today.

"The shares are up 2.77 percent to $4.83 in early afternoon trading. They got a shot in the arm on Tuesday after Reuters reported deal talk involving Deutsche Telekom, but there are other positive factors supporting the stock."

Sprint was trading at $4.84, up $0.14, or 2.98 percent, as of 1:54 PM EST.




Source

Sprint (S) May Acquire T-Mobile USA from Deutsche Telekom

Deutsche Telekom AG and Sprint (NYSE:S) have reportedly been in negotiations over the T-Mobile USA held by Deutsche, where they would receive a big stake in the combined company.

Talks have been on and off, and a deal may not be reached, said the people, who spoke on the condition of anonymity because the talks are private. The companies haven’t been able to agree on the valuation of T-Mobile USA, which reported a drop in profit in the fourth quarter, the people said. Sprint and Deutsche Telekom shares jumped.

A merger of Sprint and T-Mobile USA would combine the third- and fourth-largest U.S. wireless providers behind Verizon Wireless and AT&T Inc. (NYSE:T) T-Mobile USA may be worth $15 billion to $20 billion, according to Michael Kovacocy, an analyst at Evolution Securities in London. Sprint’s market value was $13.6 billion as of yesterday’s close.

Deutsche Telekom may be disappointed in the price an acquirer is willing to offer, Kovacocy said in an interview. Even though the company may expect about $25 billion, given the unit’s earnings performance, buyers may want to pay less because of customer losses, he said.

“It’s selling from a weak position in the marketplace,” said Kovacocy, who doesn’t own shares in either company. “The operations could fetch well south of $20 billion, well below what DTE would look for.”

Sprint was trading at $4.68, gaining $0.20, or 4.35 percent, as of 11:54 AM EST.




Source

Google (GOOG), Deutsche Telekom AG and France Telecom in Mobile Payment Battle

Google Inc. (Nasdaq:GOOG) is one of the companies in a race with mobile operators and phone companies for the future of mobile payments, according to a report Monday.

Bloomberg reported that Deutsche Telekom AG and France Telecom SA are looking to let people swipe their mobile phones to make payments at markets and other places.

The mobile operators lost the earlier battle for online applications stores to Google and Cupertino-based Apple Inc. (Nasdaq:AAPL), but they have a "fighting chance of winning the corner convenience store," according to the Bloomberg report. Apple operates an 1,800-employee campus in Elk Grove.

Source