Seeking Alpha

AT&T, Vodafone slide following DirecTV reports

  • Bloomberg and WSJ reports suggesting AT&T (T -1.3%) is close to a mega-deal for DirecTV (DTV +0.7%) (possibly worth over $66B after factoring net debt) are leading investors to bet Ma Bell won't be interested in making a bid for Vodafone (VOD -2.2%), something the company has been frequently rumored to be interested in exploring.
  • AT&T CEO Randall Stephenson has already said "the window may be closing" on acquiring European assets, and has suggested he isn't thrilled with Vodafone's efforts to grow its wireline footprint via M&A.
  • For his part, Vodafone CEO Vittorio Colao has hinted he's open to a deal, but has also made it clear his company will continue its wireline expansion strategy in the interim.
  • AT&T, which didn't sell off following prior DirecTV reports, is off moderately today, as the Street expresses some concern over the potential $100/share price tag mentioned in Bloomberg's report.
  • DirecTV (DTV +0.7%), meanwhile, has pared its AH gains and is now only trading near $88. Worries about regulatory approval might be playing a role; a Bloomberg source states AT&T and DirecTV are expecting a 12-month regulatory process for the deal.
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Comments (7)
  • dostoevsky228
    , contributor
    Comments (263) | Send Message
     
    Longtime T holder: I shudder at the thought of CEO stephenson trying yet again to make a deal. After the 4.3 BILLION dollar T-mobile fiasco, there was Dish, then Vodaphone, now DirecTV seems to be the strongest yet. Heard mixed analyst reviews of merger, which is par for a suspect CEO.
    13 May 2014, 12:53 PM Reply Like
  • 15865932
    , contributor
    Comments (308) | Send Message
     
    They were blocked in a Telefonica approach last year by Spanish gov't as well. That was the rumor anyhow.

     

    Research "G.fast" technology in development. T shareholders have to be hoping this DTV deal is a bad rumor because fiber deployment cost is about to drop by 80%, one article indicates 90%, on the back of G.fast. Video streaming over fiber is the future and G.fast uses existing copper from the curb into the home to expedite the transition. Standardization for G.fast established in April with OEMs in development. Expected commercial launch as early as first half 2015 according to one report. At 100m distance the tech pushes speeds up to 1gbps or simultaneous 500mbps up/500mbps download.

     

    My current U-verse is supposed to be 10mbps but lucky to go over 6 most of the time, yet my kids and wife have moved to streaming, on demand video using the slow 6mbps (although my wife occasionally cusses buffering/slow download). Much of this is Amazon Prime and Netflix. Think Apple TV feeds, Fire, ala cartes MLB, NBA etc. What do you think the U.S. market is going to move to when this much cheaper cost fiber deployment method is hooked up to their home? Satellite and cable bundlers are marked targets in the U.S. and E.U. markets. T would be ignorant to pay 50B for POTENTIAL in South America while they get a mature market in U.S. about to get hit by fiber ISP.
    14 May 2014, 11:10 AM Reply Like
  • Veritas1010
    , contributor
    Comments (1980) | Send Message
     
    dostoevsky228,

     

    Normally I don't agree with your ruthless invectives against T, however this time I must give you your credit for earning your 'pound of flesh'.

     

    disc.: long T, but very suspect on this merger financially, and its automatic approval. I think VOD was a much more of a meritorious target for acquisition - if this was the strategic intent of T.
    13 May 2014, 01:04 PM Reply Like
  • Topcat
    , contributor
    Comments (512) | Send Message
     
    No way this deal goes through (it better not)...mergers like this is why we are all paying higher than the rest of the world for slower internet and cable and satellite rates. We need MORE competition, not less. Obama administration will never approve this.
    13 May 2014, 02:26 PM Reply Like
  • Ruffdog
    , contributor
    Comments (2190) | Send Message
     
    I am in an area where U-verse is not available so T gives me DirecTV. DirecTV customer service is worst than T. If they merge I will only have to deal with one service, I hope!
    13 May 2014, 03:12 PM Reply Like
  • Just Some Guy
    , contributor
    Comments (1507) | Send Message
     
    Very dubious merger proposal, and I think at this price DTV is already overpriced.

     

    Very reminiscent of BofA buying Countrywide.
    13 May 2014, 08:42 PM Reply Like
  • 15865932
    , contributor
    Comments (308) | Send Message
     
    Fellow on Bloomberg yesterday started the discussion with the comment the industry was laughing at AT&T buying a fading technology. Something just doesn't add up. Only logic behind it by the three (mediator not included) on Bloomberg was there is little strategic logic and just financial engineering with one commenting a caveat. Caveat would require a mostly or all stock offer or it wasn't even a good financial engineering deal for T.
    14 May 2014, 11:15 AM Reply Like
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