Seeking Alpha

FCC opposes Sprint/T-Mobile's reported $10B spectrum play

  • "If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition," says the FCC in a blog post. The post outlines a proposal by chairman Tom Wheeler that bars carriers from jointly bidding in next year's huge low-frequency spectrum auctions.
  • The WSJ reported two weeks ago Sprint (S +1.4%) and T-Mobile (TMUS +1.4%), each of whom have a dearth of low-frequency spectrum relative to AT&T and Verizon, plan to form a JV that would raise $10B to jointly bid in the auction. The funds would be obtained through a $45B financing package SoftBank is lining up for a Sprint/T-Mobile merger.
  • "It’s certainly a hint that they are predisposed against a merger," says analyst Craig Moffett about the FCC's stance. Prospective T-Mobile acquirer Iliad (OTC:ILIAF) must be pleased.
Comments (13)
  • DrP79
    , contributor
    Comments (1401) | Send Message
     
    yes two small players combined who together will not be as strong as the existing duopoly will "Hurt" competition. Someone needs to work out that logic
    1 Aug, 04:22 PM Reply Like
  • Energysystems
    , contributor
    Comments (1137) | Send Message
     
    "Small players"? LOL. Both $S and $TMUS have more than 50M subs each. This, "woe is me, the small timer" is BS. The idea of a JV bid was ludicrous from the start; not even considering the possibilities of everything surrounding these two companies.
    1 Aug, 09:58 PM Reply Like
  • DrP79
    , contributor
    Comments (1401) | Send Message
     
    Market share analysis is important

     

    34.....ATT
    34.....Verizon

     

    30.....COMBINED
    ........16.....Sprint
    ........14.....T-Mobile

     

    02.....others

     

    Going up against players twice your size is hard. Just the additional customers to spread out your fixed costs [in a very capital intensive industry] is very important

     

    THREE STRONG players provide better competition than TWO STRONG and two relatively smaller players.

     

    It is one thing to stop ATT or Verizon from buying the #3 or #4 but a completely different analysis for #3 and #4 combining.
    2 Aug, 08:52 AM Reply Like
  • Energysystems
    , contributor
    Comments (1137) | Send Message
     
    $TMUS has done just fine since Legere became CEO. Adding a million plus every quarter for, what, the past 5 quarters?

     

    Less competition does not equal more competition, no matter how hard people try to spin that.

     

    $S has fallen to #4, due to the fact that Son hasn't canned Hesse. Sticking with a failure doesn't get you anywhere.
    4 Aug, 07:48 PM Reply Like
  • DrP79
    , contributor
    Comments (1401) | Send Message
     
    tie a hand behind your back and see if you have a fair fight against another skilled boxer and if the numbers work in your favor.

     

    One player is still stronger than two unequal fighters
    5 Aug, 09:19 AM Reply Like
  • MSF INVESTMENTS
    , contributor
    Comments (4255) | Send Message
     
    Someone is biased, what;s the reason, cash?
    1 Aug, 06:46 PM Reply Like
  • Energysystems
    , contributor
    Comments (1137) | Send Message
     
    Same as it has always been, less competition does not equal more competition. 4 carriers > 3 carriers. The street knows, check the share prices.
    1 Aug, 09:59 PM Reply Like
  • 15346002
    , contributor
    Comments (14) | Send Message
     
    Funny Wheeler makes Sprint's argument for consolidation. "Suppressing meaningful competition" is exactly what is happening with the duopoly and their resources. Combining the number three and four carriers for the auction just evens the playing field, but it does set a terrible precedent for the the top two to join forces with each other or a smaller partner for future auctions. The premise of the FCC's decision makes sense for the auction, but not for consolidation. The FCC may want four carriers, but what they have is two carriers and two 1/2 carriers. Sooner or later this ends with three and Iliad is not the answer, just a new player with the same problem.
    2 Aug, 03:04 AM Reply Like
  • cramdaddy
    , contributor
    Comments (4) | Send Message
     
    We will have 3 no matter what...if they don't merge...one will die a long slow death...no one making money...except $VZ & $T...then we will have 2...and 2 is < 4 the last time I checked...
    2 Aug, 03:05 AM Reply Like
  • MSF INVESTMENTS
    , contributor
    Comments (4255) | Send Message
     
    The airlines were consolidated.
    2 Aug, 06:59 AM Reply Like
  • FunnelVision
    , contributor
    Comments (12) | Send Message
     
    S TMUS merger cancelled. No wonder there was a rush to get the Iliad bid in place.
    2 Aug, 07:47 AM Reply Like
  • vincent mcbride
    , contributor
    Comments (15) | Send Message
     
    T-Mobile is correct in realizing to compete with AT&T and Verizon you need low-band spectrum. T-Mobile already owns spectrum in 17 of the top 25 metro markets and is now pot committed to the 700 MHz A block spectrum.
    T-Mobile can't afford to wait around or take the risk of sky-high spectrum prices in the 600 MHz spectrum auctions. T-Mobile must act fast and bite the bullet to buy the rest of the 700 MHz A block spectrum . it's subscribers will switch back to Verizon or AT&T after dropping one too many calls . You need low band spectrum in the subways, tunnels, elevators, steel buildings, and underground parking garages. Remember most T-Mobile customers are contract free.
    2 Aug, 08:57 PM Reply Like
  • hksche2000
    , contributor
    Comments (888) | Send Message
     
    T plus VZ own Wheeler. He probably already has a top job lined up at one of them, once he exits the FCC through the revolving door. Remember Treasury secretary going to City? Plum positions and stock options are waiting for those gov agents who grease the wheels, and nowhere more so than at the FCC.
    3 Aug, 12:58 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector