39% Annualized Return And AT&T
Chris DeMuth Jr. • 175 Comments
Chris DeMuth Jr. • 175 Comments
Going Long Leap Wireless: More Than A Leap Of Faith
Helix Investment Research
Helix Investment Research
Jun. 8, 2015, 12:32 PM
- Vodafone (VOD +0.6%) has gained as much as 12.5% after John Malone's May 19 comment about how the company would be a "great fit" with his Liberty Global, but some sober thought about regulatory risk for any deal has meant it coming a bit closer to earth, down 5.6% from the 52-week high.
- Vodafone clarified that the companies were talking about an asset swap and talk now turns to whether Vodafone's board might consider a breakup of the firm in order to ease a deal -- in which case AT&T (NYSE:T) could re-emerge as a buyer, using cash flow from an acquisition of DirecTV (NASDAQ:DTV).
- Vodafone is already considering an IPO of its India business, and the other emerging market operations may need to be split off as well. But CEO Vittorio Colao has been opposed to splitting the firm.
- Oppenheimer speculated earlier this year that AT&T could acquire Vodafone and move its HQ out of the U.S. for tax savings, though the Obama administration planned to fight such strategies.
- Meanwhile, Bank of America has upgraded Vodafone to Neutral from its previous Underperform, and raised its price target to $38 from $35. Shares are trading today at $37.27.
- Previously: Vodafone -2.2% after dampening Liberty merger talk (Jun. 05 2015)
- Previously: Vodafone up as Goldman says it may be an asset seller (May. 22 2015)
Jun. 2, 2015, 6:46 PM
- Mogul John Malone floated an interesting idea today: Forget Sprint and T-Mobile -- the wireless industry could get its third major alternative to Verizon and AT&T (NYSE:T) with the merger of Charter Communications (CHTR -1.6%) and Time Warner Cable (TWC -0.9%).
- Malone was speaking at his various Liberty companies' annual meetings and noted that in 2012, the cable consortium SpectrumCo got an option to participate in a wireless MVNO service with Verizon (NYSE:VZ) after the wireless firm bought $3.9B in frequencies.
- Charter wasn't in SpectrumCo then, but merger partners TWC and Bright House are. “The concept that Comcast, a greatly enlarged Charter and Cox could together offer a WiFi-optimized connectivity service with a default to a Verizon MVNO is an interesting concept," Malone said.
- He thinks "there's very little dirty underwear" left to be found in a regulatory review of Charter-TWC after the past year's scrutiny.
- Also of interest regarding Charter capex and the dividend: “Everybody's going to say, ‘Oh he’s spending too much capital,’ but I think the end result with be worth it ... To a large degree we’re betting on Tom Rutledge and his team to wake up a sleepy cable company that was treading water in all honesty for a while and trying to satisfy shareholder pressures with buybacks and dividends as opposed to putting the money into having a competitive service offering.”
- Malone company shares today: LMCA -0.1%; LMCB flat; LMCK flat; LTRPA -0.9%; LTRPB +2.2%; QVCA +0.8%; LBRDA +0.1%; OTCQB:LBRDB flat; LBRDK -0.1%.
Jun. 2, 2015, 12:13 PM
- With a federal review now in its endgame, AT&T (T +0.4%) is ready to make concessions in order to seal its $49B deal for DirecTV (DTV +0.2%), The Washington Post reports.
- Speculation has centered on whether AT&T would embrace the FCC's new net neutrality rules regardless of the outcome of its pending litigation -- and the company appears ready to do so in several areas to get the deal done.
- Along with offering stand-alone broadband plans that might encourage cord-cutting, AT&T would honor a ban on blocking and throttling (slowing down) sites, as well as agree to refrain from "paid prioritization" -- where companies pay Internet providers to get into a "fast lane."
- Several details are unclear, though, including how long AT&T would need to abide by the commitments (earlier reports suggested several years), or what its broadband-only plans would have to look like in speed and price (opponents want 25 MBps for $30/month; AT&T's countered with 6 MBps for $35/month).
- Also still a thorny issue: interconnection fees that have seen content firms wrestling with carriers over who's paying for heavy traffic from the likes of Netflix.
- Previously: AT&T/DirecTV deal review still paused at FCC (May. 28 2015)
May 28, 2015, 7:47 PM
- The "shot clock" on the FCC's review of AT&T's (NYSE:T) purchase offer for DirecTV (NASDAQ:DTV) -- the 180-day period where the agency vets the deal -- is still in pause, even though deal reviews will be starting to pile up behind it (Charter-TWC, Avago/Broadcom).
- The FCC paused the clock in mid-March with just 10 days left, and while it's an informal deadline, it can be used to get more documents for review.
- That pause was due to a court case on third-party programming contracts, and that was decided weeks ago.
- AT&T, for its part, is submitting more documents in hopes of getting the review moving again.
May 18, 2015, 10:22 AM
- After a pause, AT&T (T +0.4%) looks ready to move forward with new investment on the expectation that new net neutrality rules will get changed either by the courts (AT&T is party to action in federal court) or Congress.
- CEO Randall Stephenson had suggested that the company pause a plan to spend billions while they awaited the final rules from the FCC on how the industry would be regulated.
- Now: "So we've said we're going to invest around $18 billion this year. That will allow us to deploy a wireless broadband solution to 13 million homes around the U.S.," he said on CNBC. "That compares to about $22 billion last year."
- AT&T extended its deadline for acquiring DirecTV (NASDAQ:DTV) as it expects to close the deal in Q2 and many observers think the acquisition will be done at least by July.
May 15, 2015, 6:44 PM
- AT&T (T +0.6%) and DirecTV (DTV +0.5%) both gained today as their merger grows more and more likely (and nearer -- most observers expect a done deal in July).
- Unsurprisingly, the two companies filed an 8-K today extending the original merger termination date from May 18 (one year after it was set) to allow for the time needed to close the deal.
- The FCC has yet to restart the 180-day "shot clock" on the deal that they paused in mid-March. An intervening case over disclosure of programming contracts was thrown out by an appeals court.
- Previously: Dish, Cogent lay out concessions for AT&T/DirecTV deal (May. 13 2015)
- Previously: Appeals court throws out FCC's order to reveal contracts (May. 08 2015)
- Previously: Cogent joins Netflix in demanding conditions for AT&T/DirecTV combo (May. 05 2015)
- Related: AT&T: The DirecTV Deal Gets A Major Boost (May. 15 2015)
May 13, 2015, 6:50 PM
- Dish Network (NASDAQ:DISH) and Cogent Communications (NASDAQ:CCOI), along with other advocacy groups, have spelled out the conditions they'd like to see for a successful AT&T (NYSE:T) purchase of DirecTV (NASDAQ:DTV).
- Opponents to the deal met with FCC staffers last week; AT&T is expected to meet with deal reviewers in the coming days, and hopes to close the deal by the end of June.
- Dish, Cogent and other critics asked that AT&T promise to sell Internet as a standalone service outside of its bundles at a reasonable price, and they asked the FCC to make AT&T comply with stricter net neutrality provisions for seven years, regardless of how AT&T's suit against the rules comes out.
- Also requested: that AT&T include all video in any data caps, and restrictions on how AT&T handles interconnect traffic -- which particularly affects Netflix (NASDAQ:NFLX) and Dish's new Sling TV streaming service, key competition for DirecTV service.
- Previously: Cogent joins Netflix in demanding conditions for AT&T/DirecTV combo (May. 05 2015)
- Previously: Netflix to FCC: Reject AT&T/DirecTV merger (May. 05 2015)
May 5, 2015, 11:47 PM
- Cogent Communications (NASDAQ:CCOI) joined Netflix today in calling for conditions on the proposed merger of AT&T (NYSE:T) and DirecTV (NASDAQ:DTV).
- Data carriers like Cogent (along with firms like Netflix) are focused on interchange issues, the fees that a broadband behemoth could collect for accepting Internet traffic -- and their opposition, or the nature of it, could be good news for the deal, says industry analyst Craig Moffett.
- The reason? The companies could be kingmakers by urging concessions, he says: They helped sink the Comcast-TWC deal, and now with AT&T/DirecTV, “two of the most ardent opponents are tacitly blessing the idea of the merger as long as there are appropriate conditions.”
- The two say that a combined AT&T/DirecTV with no restrictions will have a bigger incentive to stymie streaming entertainment.
Apr. 30, 2015, 5:31 PM
- AT&T (NYSE:T) has wrapped its acquisition of Nextel Mexico from NII Holdings for $1.875B (less some $427M of adjustments including net debt).
- Following its integration of Iusacell earlier this year, the company says it plans to create "the first-ever North American Mobile Service area, which will cover more than 400 million consumers and businesses in Mexico and the United States."
- AT&T credited quick action by Mexico's post-reform telecom regulator in getting the deals through smoothly.
- Thaddeus Arroyo, CEO of AT&T Mexico and Iusacell, will be in charge of the combination.
- Previously: AT&T adds more unlimited calling to Mexico (Feb. 17 2015)
- Previously: AT&T closes Iusacell deal, puts tech exec in charge (Jan. 16 2015)
Apr. 24, 2015, 7:30 PM
- Comcast has ended its pursuit of Time Warner Cable, but what about that lawsuit from content companies that threatened to slow the whole thing down?
- Companies including CBS, Walt Disney (NYSE:DIS) and Viacom (VIA, VIAB) argued that the FCC's sharing hundreds of thousands of pages of negotiating strategies with third-party merger opponents like Dish Network (NASDAQ:DISH) would be "highly damaging." The fight was likely to add several weeks to any related merger consideration.
- The suit, still at the U.S. Court of Appeals, is still in progress because it also involved the ongoing AT&T (NYSE:T) deal to acquire DirecTV (NASDAQ:DTV). Attorneys close to the case are figuring that the Comcast-TWC documents will now be off the table as a moot point.
- Still, the decision likely still has an impact on the timeline for AT&T/DirecTV. The FCC will file an updated notification with the court.
- Previously: AT&T sells third-biggest debt offering to fund DirecTV purchase (Apr. 23 2015)
- Previously: Comcast, TWC move higher premarket on merger's end (Apr. 24 2015)
- Previously: It's over: Comcast officially ends $45B pursuit of TWC (Apr. 24 2015)
Apr. 23, 2015, 6:24 PM
- AT&T (T +4.2%) peddled $17.5B in bonds in the third-biggest debt offering on record, as it draws funds to help pay for its acquisition of DirecTV (NASDAQ:DTV) -- a media deal that looks to be a survivor as other mergers fall apart.
- The sale's part of a record year in debt sales; it's the third-biggest ever but only the second-largest this year, as Actavis sold $21B in March.
- Yield-hungry investors put in $68B in orders, nearly four times the offer. A 10-year bond was priced to yield 3.435%; a 31-year bond at 4.772%.
- The company may be getting ahead of the rush. More debt deals are likely to come ahead of any move by the Fed to raise rates, and they're likely to find investors so long as there are negative yields still in the market.
- AT&T will redeem some bonds at a premium if the DTV deal's not done by Nov. 30, though it still exepcts a Q2 closing.
- Previously: AT&T call: On reducing churn, and post-acquisition deleveraging (Apr. 22 2015)
Apr. 21, 2015, 7:17 PM
- FCC officials tomorrow will brief staff about the proposed $45B merger of Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC), Reuters is reporting -- though with no news about which way officials are thinking.
- The briefing may be light on specifics but might offer some clues to how the FCC will deal with recent public opposition to the buyout. The FCC's ruling on the deal will focus on public interest, while the Department of Justice focuses on antitrust concerns.
- The staff will also be briefed tomorrow on AT&T's (NYSE:T) $48B deal to buy DirecTV (NASDAQ:DTV), according to Reuters.
- Previously: WSJ: Comcast, Time Warner Cable to meet with Justice Dept. (Apr. 18 2015)
- Previously: Comcast defends TWC deal, announces 2-Gbps California plan (Apr. 17 2015)
Apr. 9, 2015, 9:08 PM
- Don't let recent merger challenges and failures fool you, Michael Wolff argues: "M&A mania" is coming to a media conglomerate near you amid pressure for a new wave of consolidation.
- "Perhaps never before has consolidation been so much the flavor of the month, nor has it seemed so difficult to get a taste," he writes. "The table is set, but nobody's sitting down to eat."
- If Comcast (NASDAQ:CMCSA) fails in its bid for Time Warner Cable (NYSE:TWC), he notes, it just means other cablers will step up to match Comcast's ambition, and Comcast will still look for a way to stay dominant.
- He points to a number of mergers he thinks are easily imaginable: Viacom (NASDAQ:VIA) and FOX? Disney (NYSE:DIS) and Time Warner (NYSE:TWX)? TWC and Charter (NASDAQ:CHTR)? Discovery (NASDAQ:DISCA) and, well, most anyone (Disney, Fox, CBS)?
- Factors encouraging the wave: Media's all about video now, and the pure-play aspect makes merger logic cleaner; distribution and content are separate and now even antagonistic businesses; the growth of over-the-top means not unbundling but re-bundling; and everyone needs scale for negotiation strength in content and ad deals.
- Other key players: John Malone (LMCA, LBTYA, STRZA); Verizon (NYSE:VZ); Lions Gate (NYSE:LGF); Scripps Networks (NYSE:SNI); Netflix (NASDAQ:NFLX); DirecTV (NASDAQ:DTV) and AT&T (NYSE:T); Dish Network (NASDAQ:DISH).
Apr. 7, 2015, 11:49 AM
- As expected, AT&T's (NYSE:T) $49B purchase of DirecTV (NASDAQ:DTV) is headed for an easier approval than Comcast's takeover of Time Warner Cable -- and the AT&T deal may wrap before April is through, with a few "action packed" weeks ahead, says Morgan Stanley's Simon Flannery.
- Flannery sees limited opposition to the deal, though he does warn about risks including AT&T's leverage in the deal and its recent $18B purchase of wireless spectrum.
- But the purchase may have taken too long -- way too long in coming, says analyst Craig Moffett, since the deal is "oh so 2005."
- "There was a certain logic to it at the time," Moffett says, pointing out that buying a satellite distribution arm would have been better 10 years ago, when Verizon was building a future-proof fiber network and AT&T's network limitations were clear even then.
- "Don't get us wrong. DirecTV is a well-run asset," Moffett writes, "with a sterling brand and strong management, and the company's free cash flow will clearly help sustain AT&T's dividend. But it is hard to make the case for genuine strategic fit between the two companies."
- Previously: With regulator eyes on Comcast-TWC, is AT&T's DirecTV purchase skating? (Mar. 17 2015)
Mar. 27, 2015, 8:58 PM
- Glenn Lurie, CEO of AT&T Mobility (NYSE:T), says he's not worried about the outcome if Sprint (NYSE:S) and T-Mobile (NYSE:TMUS) -- third and fourth in the U.S. wireless market behind AT&T and Verizon (NYSE:VZ) -- decide to merge.
- "We are a very, very different company than the other three," he tells FierceWireless. "So whatever happens with them, I'm not really that concerned. I'm concerned about how we execute and how we operate."
- His No. 1 goal, Lurie says, is to reduce churn and preserve the company's current subscribers in order to upsell other services.
- Chatter continues to suggest that Sprint and T-Mobile may have to think about combining to achieve competitive scale, and in the meantime they're firing salvos in a price war that Lurie says AT&T won't join: "This industry is not commoditized at all."
- Previously: Goldman upgrades T-Mobile; DT reiterates merger wish (Jan. 20 2015)
Mar. 17, 2015, 2:03 PM
- With the proposed merger of Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC) getting all the oxygen from the post-net-neutrality FCC, the $48.5B deal that AT&T (NYSE:T) has to acquire DirecTV (NASDAQ:DTV) appears to be getting a relatively free pass.
- Both deals will create a company controlling more than a quarter of pay TV -- so it may be Internet access that's drawing extra scrutiny. The combined Comcast-TWC company would serve high-speed Internet to almost 40% of Americans.
- Even FCC petitions opposing the deals are telling: 20 against Comcast-TWC, five against AT&T-DirecTV. And 88,000 brief comments opposing Comcast-TWC, 14,000 opposing AT&T-DirecTV.
- One critic of the T-DTV deal told Reuters that Justice Department reviewers responded in a meeting with "few questions" and "blank stares."
- Today: CMCSA -0.7%; TWC -1%; T +0.1%; DTV +0.2%.
- Previously: FCC pauses review of Comcast-TWC, AT&T-DTV; likely weeks away (Mar. 13 2015)
- Previously: Brean downgrades DirecTV to Hold; AT&T offer priced in (Feb. 23 2015)
AT&T, Inc. provides telecommunication services and products, including wireless communications, local exchange services, long-distance services, data/broadband and Internet services, video services, telecommunications equipment, managed networking and wholesale services. It operates business... More
Industry: Telecom Services - Domestic
Country: United States
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