Some industry watchers say it might as reports circulate tonight that the No. 3 and 4 mobile carriers have settled on basic terms of a $32B deal. They still have to iron out details, and that could postpone an announcement by several weeks, according to The New York Times (here) and the Wall Street Journal (here). But they appear to have agreed that Sprint‘s parent, Japan’s Softbank, would pay $40 a share in cash and stock for T-Mobile, which closed today at $34.28. T-Mobile’s parent, Deutsche Telecom, would keep as much as 20% stake in the combined company. It also would receive $1B in cash and assets if the deal collapses, including from objections by federal regulators. That’s a real risk: Remember that in 2011 AT&T abandoned its plan to buy T-Mobile after the Justice Department sued to block the deal, saying that consumer prices could rise if competition in wireless was reduced to three carriers from four.
Related: Is Peter Chernin Key To AT&T’s Deal With DirecTV?
The D.C. angle is what interests many in media most about a Sprint/T-Mobile plan. They wonder whether regulators might choke at the thought of approving three mega-deals, adding the telecom one to Comcast’s $45B acquisition of Time Warner Cable, and AT&T’s $49B merger with DirecTV. Softbank’s Masayoshi Son has been making the case that the two media deals help to justify a merger of Sprint and T-Mobile: By uniting their wireless assets, they could compete more effectively with cable’s broadband service, as well as with AT&T and Verizon, he says: ”If anyone says four is better than three, I agree with that. We should be the No. 4.” Read More »
On The Colbert Report last night, the soon-to-be CBS late night show host may have given advertisers pause when he wove a T-Mobile plug into a medical report. Watch here:
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“We’re ending contracts forever, for everybody,” T-Mobile CEO John Legere said today in one of the most widely watched — as well as funniest — announcements at the International CES confab. The No. 4 mobile phone provider says it will pay early-termination fees of up to $350 per line for up to five lines, and offer as much as $300 credit for the customer’s phone. This is Legere’s latest effort to rock the mobile industry which, he says, “blows. It’s just broken.” Earlier this week AT&T had security escort Legere out of a company party at CES where rapper Macklemore was performing. (“I’m not sh*tting you. I just love Macklemore,” Legere says.) The T-Mobile chief has targeted AT&T, whose plan to buy the smaller company was thwarted in 2011 when the Justice Department raised antitrust objections. Last week AT&T pre-emptively said it will offer T-Mobile customers up to $450 to switch. Legere says he’s unfazed: “AT&T is a total source of amusement for me… . AT&T takes my bullsh*t.” Read More »
This was already destined to be an interesting day for Dish Network as it prepares its annual presentation at the International CES confab in Las Vegas to unveil expanded services for its Hopper DVR and Sling Internet streaming box. But the most important development so far was out of its hands: T-Mobile effectively raised the value of airwave spectrum — which Dish has been amassing — by agreeing to a $3.3B deal to acquire a swath of 700 MHz A-Block rights from Verizon. (T-Mobile will pay $2.4B in cash, and swap some of its spectrum valued at $950M.) The transaction should improve T-Mobile’s reach in nine of the 10 largest markets and “represent(s) our biggest move yet in a series of initiatives that are rapidly expanding our already lightning fast network and improving its performance across the country,” says the company’s dynamic CEO John Legere. But the news also nudged up Dish shares to touch $58.48, the highest they’ve been in more than a decade. Using the T-Mobile deal as a benchmark, Dish’s spectrum rights are probably worth $21.4B, Wells Fargo Securities analyst Marci Ryvicker estimates — up from her previous estimate of $14.9B. That “reinforces our belief that there is significant present and future value” in Dish’s holdings, she says. Chairman Charlie Ergen wants to build his own wireless broadband operation and last month announced a plan to team with Sprint for a test this year … Read More »
A coalition of broadcasters, wireless providers, and chip makers Thursday urged the FCC to adopt guidelines to minimize potential conflict between broadcasters and wireless companies as the agency strives to cope with rising stress on bandwidth. Because of ever-increasing demand for mobile devices, the FCC proposed in September that broadcasters voluntarily give up some of their allotted bandwidth in exchange for a share of the proceeds when that bandwidth is auctioned to wireless broadband providers. The National Association of Broadcasters initially worried that broadcasters in smaller markets would be more likely to give up spectrum than those in urban markets. But it has turned out that a number of broadcasters in larger markets are willing to sell spectrum rights. Coalition goals cover a range of technical issues that are intended to protect TV and wireless signals against interference from each other and for minimum and maximum size specifications for individual segments of spectrum. The coalition also specifically calls for the FCC to expedite spectrum coordination with Canada and Mexico. In addition to NAB coalition members include Intel, AT&T, Verizon, T-Mobile and Qualcomm. You can read a copy of the coalition letter here.
AT&T and T-Mobile USA have reached a temporary agreement to enable roaming on their networks to customers of both providers in areas most affected by Sandy. Customers will be able to place calls as they normally do, but the calls will be carried over whichever network is up and running in their area, CNET reports. The companies say there will be no roaming charges or fees associated with the calls and subscribers’ current service agreements will remain in place. The arrangement is possible because both carriers run on GSM and UMTS networks. Yesterday the FCC said that 25 percent of cell sites in Sandy’s path had been knocked offline. The FCC said today the number had improved by a few percentage points but couldn’t provide an exact number, according to PC Magazine.
Separately, Verizon worked to repair damage at its Lower Manhattan headquarters where 3 1/2 of 5 basement floors were still flooded. Switching equipment on upper floors wasn’t damaged but connections for incoming lines remain under water. Verizon was also working to restore telephone hubs in other locations downtown. The company announced this afternoon that workers had successfully erected a temporary wireless antenna in Jersey Ci]oty across the Hudson River from Lower Manhattan.
The reason: T-Mobile probably will now end its effort to block Verizon Wireless’ deal to pay nearly $4B for Comcast and other cable operators’ wireless spectrum — part of a broad peace agreement between the companies. Verizon Wireless said today that it will turn over to T-Mobile spectrum that reaches 60M potential customers (including areas of the northeast where T-Mobile is weak) in return for cash and spectrum that reaches 22M people (including several areas in California). While the companies didn’t say how much cash was involved, Bernstein Research figures it’s about $260M. But the arrangement “is contingent on the closing” of Verizon Wireless’ deals with cable, which are being reviewed by the Justice Department and the FCC. Last week T-Mobile told the FCC that Verizon’s pact with cable “poses grave competitive concerns” and would significantly diminish competition for wireless broadband in New York, Chicago, Philadelphia, Atlanta, Washington, D.C., and Detroit. Verizon’s new deal with T-Mobile also requires FCC approval. Verizon Wireless CEO Dan Mead says that the T-Mobile agreement “is further evidence of the importance of a secondary spectrum market to give the companies the flexibility to exchange or acquire spectrum to meet customers’ growing demands for wireless data services.” Read More »
What a difference a few months makes. T-Mobile, which late last year asked the federal government to approve its merger with AT&T (the feds didn’t), is now asking the FCC to block approval of Verizon’s $3.9 billion acquisition of wireless spectrum. The sale, announced in December, would provide Verizon with 122 licenses for wireless airwaves that reach about 259 million people and is designed to bolster what has become a shortage of spectrum owing to the proliferation of mobile services. But T-Mobile argues in a filing today that the deal would allow its rival “to accumulate even more spectrum on top of an already dominant position, while checkmating crucial avenues for growth of its smaller competitors.” The FCC is reviewing the sale, which involved Comcast, Time Warner Cable and BrightHouse Networks selling the mostly unused licenses in a deal that will net them a 60% profit from the investments they made beginning in 2006. Verizon argues that putting that spectrum to use is good for consumers increasingly craving mobile services.
AT&T shares are down more than 2% in pre-market trading after it dumped a lot of bad news into a 4Q report that includes costs tied to the collapse of its $39B effort to acquire T-Mobile. The phone giant ended the period with a $6.7B net loss, down from a $1.1B profit in the same quarter last year, on revenues of $32.5B, up 3.6%. The revenue figure slightly beat the $32B that analysts expected. But even after excluding several one-time expenses, including those tied to the T-Mobile deal, earnings would have come in at 42 cents a share — a penny shy of the 43 cents that the Street expected. AT&T had to report a $1.12 a share loss, though: T-Mobile cost $4.2B. The company also took a $6.3B charge for actuarial losses from its benefit plans, and a $2.9B asset impairment charge for its directory business. In addition to the unusual items, AT&T lost about 1.1M phone wireline customers to end the year with 39M. The news wasn’t all bleak. AT&T says that it added 208,000 U-verse video customers, bringing its total to 3.8M. It also was a record quarter for smartphone sales. CEO Randall Stephenson says that AT&T starts the year “with the best visibility we’ve had in some time, and we’re well positioned to deliver solid results.” He added the magic words that shareholders of companies like his long to hear: “In short order, we will begin share … Read More »
Dish is up 9.1% in afternoon trading partly based on a theory that the satellite company is in AT&T’s sights now that it has abandoned its effort to merge with T-Mobile. Stifel Nicolaus’ Christopher King is among the analysts who say that it makes sense: AT&T craves spectrum, but it has few places to get it. The Justice Department and FCC nixed the idea of a merger with another wireless phone company. Cable operators also are out after their recent agreement to sell the spectrum they control to Verizon Wireless. That would seem to leave Dish, even though it was one of the loudest opponents of AT&T’s deal with T-Mobile. Dish founder Charlie Ergen has been amassing spectrum — including some in the 700 megahertz band, which is where AT&T is building its 4G network — to help create his own national broadband and video-streaming service. The satellite company has said that it would like to find a partner to help pay for his ambitious plan, and identified T-Mobile as a possibility. And even though Ergen says Verizon and AT&T need another competitor, he didn’t rule out a deal with AT&T when asked last month about the possibility. “If the merger is not allowed then it could be” an option, he said in a conference call with analysts. Read More »
There goes the $4B break-up fee that AT&T promised to pay T-Mobile owner Deutsche Telekom if the merger went awry. Meanwhile, shares of Sprint Nextel — which risked being marginalized by the AT&T/T-Mobile combo — are up 7.9% in after-hours trading, after falling 4% during the day. AT&T’s dream deal effectively was cooked after the Justice Department and FCC said that a merger would result in less competition and higher consumer prices. Justice said it would sue to block the deal, and the FCC began a process that promised to drag things out even more. But AT&T says that its decision to scrap the plan doesn’t change the fact that wireless carriers need more spectrum. “The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage,” the company said. “In the absence of such steps, customers will be harmed and needed investment will be stifled.” CEO Randall Stephenson added that his company “will continue to invest” in wireless. He urged lawmakers to approve AT&T’s bid to buy spectrum controlled by Qualcomm, and ”enact legislation to meet our nation’s longer-term spectrum needs.” That’s code for: Let’s pry spectrum away from TV broadcasters.
For the last week or so we’ve been fascinated by the possibility that Verizon will create a streaming video business. But don’t forget Dish Network, which also owns Blockbuster video. “If Verizon can do it, why can’t we?” Dish Network CEO Joseph Clayton asks Bloomberg. He added that “there’s not a lot of infrastructure you have to put in place for this. The expense is the programming.” Dish is already talking to TV networks about potential licensing deals. Dish also wants to amass wireless spectrum so it can do an end-run around cable and phone company broadband services. Clayton notes that Dish has more opportunities now than it did just a few weeks ago to forge partnerships that might give it better access to the airwaves — and offer a full range of video, voice, and data services.
T-Mobile is a potential ally if its merger with AT&T collapses following Justice Department and FCC attacks on the $39B deal. That appears more likely today: Justice put its antitrust case against the companies Read More »
You rarely see a company that does as much business with federal regulators as AT&T does attack them as ferociously as the phone giant did today. AT&T is livid over an FCC staff study that concluded its $39B wireless phone acquisition of T-Mobile would be anti-competitive and result in lost jobs. The report, released yesterday, ”is so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis,” AT&T Senior EVP External & Legislative Affairs Jim Cicconi said in a blog post. He adds that the report “cherry-picks facts to support its views, and ignores facts that don’t,” and “treats its own speculations as if they were fact.” Calling the staff effort ”not the fair and objective analysis to which any party is entitled,” Cicconi also blasted the FCC for releasing the document. AT&T withdrew its merger application at the agency after the FCC moved to block it, although the phone company hasn’t formally abandoned the effort to acquire T-Mobile. By making the report public, he says, the FCC showed that “this was intended more for advocacy and to impact public perceptions. And neither is a proper basis for action by a regulatory agency.” Read More »
UPDATED: The merger of the wireless companies was already on the ropes after August when the Justice Department said it would challenge the deal in court on antitrust grounds. Now FCC Chairman Julius Genachowski is circulating a draft order that would add an important additional barrier to the deal: It would ask an administrative law judge to consider whether the combo would serve the public interest — after the end of the Justice trial, due to begin in February. That would significantly delay and complicate the AT&T and T-Mobile’s merger plans. The last time the FCC did this — in 2002 when Echostar wanted to merge with DirecTV — the companies scrapped their plan.
Genachowski’s proposal follows a conclusion by FCC staff that consumers would be harmed if AT&T and T-Mobile merge. “The record clearly shows that — in no uncertain terms — this merger would result in a massive loss of U.S. jobs and investment” as AT&T cuts costs to make the economics of the deal work, a senior FCC official says. The agency found that there’d be less competition in 99 of the 100 biggest markets. (The exception is Omaha.) Staffers also concluded that the deal would not improve deployment of 4G services. If the FCC decides not to approve a merger like this, then it has to send the case to an administrative law judge for a court-like hearing that would look at whether the deal would serve the public … Read More »
DirecTV CFO Patrick Doyle seems to like the idea of merging his company with its closest rival, Dish Network. “Ten years ago we had a deal on the table,” he says. “The strength that you’d have in negotiations would be tremendous.” But he says a combination probably wouldn’t fly in Washington following the Justice Department’s recent decision to fight AT&T’s merger deal with T-Mobile. That “adds more uncertainty to where we are in the merger and antitrust environment.” Meanwhile, he doesn’t seem ready to say that DirecTV needs a deal despite the company’s lackluster domestic subscriber growth in June — to 19.4M, up 4% vs. the same period last year. Doyle attributes the weakness to defections by people who decided they can no longer afford pay TV. “We hope they’re not gone forever,” he says. Yet people who kept their satellite service are spending less. ”We’re not seeing the type of demand that we’d like to see” for pay-per-view movies as well as other events, including fights, he says. As economic pressures grow, controlling programming costs has become “the No 1 issue for the industry. … We’re negotiating harder on marginal (channels).” Read More »
Cable and telecom execs are buzzing this morning about the possibility of a major deal involving Sprint Nextel that could help cable operators offer wireless services along with the standard “triple play” options: TV, wired broadband, and wired phone. Comcast and other operators are talking with Sprint about a buyout of struggling wireless firm Clearwire. Its shares are up more than 30% in mid-morning trading following a Bloomberg story about the possible deal. Here’s how it might work: Comcast and other operators – perhaps Time Warner Cable, Cox, Cablevision, and Bright House Networks – would make an investment in Sprint. The telecom company then would buy all or most of the 46% of Clearwire that it doesn’t already own. (It’s unclear whether that might include the 15% stake owned by Comcast, Time Warner Cable and Bright House Networks.) Presumably, cable companies then would offer Sprint’s wireless phone and broadband services.
Sprint could use some help: It has been in the red for 15 consecutive quarters. And if federal officials allow AT&T to buy T-Mobile, then Sprint could become an also-ran behind the newly merged company and Verizon. Clearwire’s also in trouble. It’s in the red and needs at least $600M to build and upgrade its speedy 4G network which is available to 130M households and has about 7.7M customers.
The big question is whether the deal would be worth the trouble for cable companies. Most have promised to return cash to shareholders — not to make big … Read More »
AT&T announced the deal ahead of a major wireless conference in Orlando tomorrow. The new entity would be the biggest in the U.S. with 130 million subscribers. The result is that America’s national mobile carrier choices will decrease by one to just three — if the AT&T purchase of Deutsche Telecom AG’s U.S. T-Mobile unit passes antitrust regulatory hurdles. Forget whether you’ll now get service in dead zones in Pacific Palisades. The real issue for Hollywood is that this is now one less place to sell its content. Big Telco is becoming exactly like Big Media by reducing competition: I think they deserve one another.
According to Deadline’s sibling site BGR.com: ”With all of the talk of Sprint and T-Mobile joining up, the AT&T news comes out of the blue — though strategically it makes more sense due to both carriers’ spectrum and network technology. It has been widely reported that Deutsche Telekom was looking to get rid of T-Mobile USA for various reasons. AT&T has also committed to delivering LTE to an additional 46 million people with the T-Mobile acquisition, promising to cover close to 95% of the U.S. population with LTE wireless services in the future. The deal is expected to close, pending regulatory approval, within the next 12 months.”