Tag Archives: tmus

AT&T, Comcast Election Watch: Trump To Favor National Champions?

Republican presidential front-runner Donald Trump could favor large-scale telecom M&A to build national champions, while Democratic front-runner Hillary Clinton would likely nominate a new FCC chairman with views similar to current FCC Chairman Tom Wheeler, who promotes competition. So says RBC Capital in an outlook report on the presidential election. Republican primaries in five states on Tuesday, including Florida and Ohio, are critical for Trump, who leads in delegates vs. Texas Sen. Ted Cruz, Ohio Gov. John Kasich and Florida Sen. Marco Rubio. On the Democratic side, Clinton has been unable to put away Vermont Sen. Bernie Sanders. Under Wheeler, the Federal Communications Commission thwarted Comcast ’s ( CMCSA ) acquisition of Time Warner Cable ( TWC ), and snuffed out merger talks between Sprint ( S ) and T-Mobile US ( TMUS ). The FCC, though, did allow  AT&T ( T ) to buy DirecTV Group. Many of Wheeler’s regulatory policy changes, meanwhile, have targeted Internet service providers, such as Comcast, AT&T and Verizon Communications ( VZ ). Jonathan Atkin, an RBC Capital analyst, says that based on his research, Trump is a telecom wild card. “Trump, on this topic, is considerably less predictable and could be an advocate of large national champions to enhance competitiveness vs. foreign countries, and hence, in certain cases, more accepting of consolidation,” Atkin said in the research report. “Cruz’s, Rubio’s or Kasich’s stance on antitrust could likely be similar to those of Bush or Reagan,” Atkin added. “This does not mean that every merger would be supported, but it would be 10%-20% easier to get horizontal deals done under a Republican vs. Democratic administration, in the view of one regulatory contact,” Atkin wrote. In a new Democratic administration, Atkin speculates that Comcast could buy a wireless company but probably not more cable TV assets. Within the telecom industry, there’s a perception Wheeler has favored Silicon Valley and Internet companies such as Apple ( AAPL ), Alphabet ’s ( GOOGL ) Google and Facebook ( FB ) ( IBD ) vs. Internet service providers. Broadband service providers are currently challenging Wheeler’s “net neutrality” rules in federal court. Atkin’s view is that Sanders’ election would be the worst outcome for the telecom companies. “Clinton could end up bringing in as FCC chair someone who is similarly aligned as Mr. Wheeler,” Atkin said. “Sanders could select as FCC chair someone who is even possibly more consumer-oriented than the current chair, and may possibly attempt to rate regulate broadband.”

Sprint Seen ‘Pulling Away’ From Prepaid As AT&T, T-Mobile Battle

Sprint ( S ) has “pulled away” from the prepaid segment of the wireless market, as AT&T and T-Mobile US ( TMUS ) slug it out in the segment, says Cowen & Co. AT&T ( T ) has gained share in the prepaid market with its “Cricket” brand, while T-Mobile continues to be successful with its “MetroPCS” brand, says Cowen in a research report, which rates T-Mobile stock outperform. Both AT&T and T-Mobile have stepped up their prepaid marketing . Prepaid subscribers traditionally bought calling minutes as needed and don’t have service contracts. But the marketing lines have blurred between the prepaid and postpaid segments as wireless firms phase out service contracts. Many prepaid plans renew automatically every month. Prepaid customers typically buy less-pricey phones upfront, and spend less on data services. “The balance of power (in prepaid) is shifting. In 2015, prepaid accounted for 29% of total (industry) net adds vs. just 12% in 2014, driven by strong growth at both Cricket (AT&T) and MetroPCS (T-Mobile),” Cowen analyst Colby Synesael said in the report. “Sprint has meaningfully pulled away from the market and has shifted its focus toward the postpaid (phone) market, and just recently began de-emphasizing its Virgin (prepaid) brand,” Synesael added. According to some industry reports , though, Sprint recently overhauled some of its prepaid plans. T-Mobile and AT&T both added 469,000 prepaid subscribers in Q4, while  Verizon Communications ( VZ ) shed 157,000 and Sprint lost 491,000. Some of Sprint’s prepaid subscribers upgraded to postpaid plans. T-Mobile acquired prepaid specialist MetroPCS in 2013 and has kept the brand alive. AT&T acquired Leap Wireless and its Cricket brand for $1.2 billion in 2014. Since then, AT&T has stepped up Cricket advertising while opening more retail stores. “The makeup of the prepaid market is shifting from a segmented low-end, pay-as-you-go service to higher-end monthly plans driven by solid device lineups that are riding on quality nationwide LTE networks,” said Synesael. Image provided by Shutterstock .

SoftBank Divides, Lumps Sprint, Alibaba Stake Amid Debt Crunch

SoftBank Group said it will split into two companies, putting U.S.-based Sprint ( S ), its stake in China’s Alibaba ( BABA ) and other overseas operations into one entity. In its statement, SoftBank,, which is Sprint’s majority owner, did not say how the restructuring  would affect its sizable debt. Credit rating agencies have not yet commented on the move. Nikesh Arora, SoftBank Group president, will head up operations abroad, the company said. The other entity will include SoftBank’s mobile operations in Japan, including its investment in Yahoo Japan ( YHOO ). SoftBank founder Masayoshi Son will control both companies. SoftBank shares closed 1.8% lower Monday on the Tokyo stock exchange before the announcement. Sprint stock was up 1.5% in early trading in the stock market today , near 4. Sprint has struggled vs. Verizon Communications ( VZ ), AT&T ( T ) and T-Mobile US ( TMUS ). According to a Bloomberg report last week, SoftBank is set to establish a subsidiary that will inject capital into Sprint. The subsidiary will accept Sprint’s wireless equipment and part of its wireless spectrum as collateral for $3 billion to $5 billion in loans. Sprint has about $33 billion in debt. Sprint exited Q4 with about $6 billion in liquidity, but continues to burn cash. “With $2.3 billion in debt coming due in 2016 ($10 billion by 2020) and given the widening spreads in the high-yield markets, Sprint has limited options to favorably access capital markets,” said Oppenheimer in a research report. Some analysts have speculated that SoftBank will take a write-down related to the Sprint acquisition. SoftBank paid $21.6 billion for 78% of Sprint, in a deal that closed in 2013. “Sprint’s share price had risen to $4 as of March 3, and we expect SoftBank to avoid asset impairment losses on its stake in Sprint at the parent level if the share price is above the end-September 2015 level of $3.84 at end-March 2016,” said Nomura Securities in a report.