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
Mar. 13, 2015, 4:28 PM
- As signaled before, the FCC has paused the 180-day "shot clock" on reviewing two megamergers -- Comcast's (NASDAQ:CMCSA) deal for Time Warner Cable (NYSE:TWC), and AT&T's (NYSE:T) deal to buy DirecTV (NASDAQ:DTV) -- as it's tied up with another case over programming contracts.
- The review of the deals was set to expire by the end of March, but now may take somewhat longer, likely several more weeks.
- The cause is the ongoing dispute with programming firms -- Disney (NYSE:DIS), CBS, Twenty-First Century Fox (NASDAQ:FOXA), Viacom (VIA, VIAB) and others -- over whether third parties commenting on the mergers will get access to private documents containing sensitive pricing and strategy information.
- The FCC has argued it has sufficient protections to keep those details from getting out. But the merger reviews now appear to be dependent entirely on that case's timetable.
- "In reaching this conclusion, the commission reserves the right to restart the clock as it believes will best serve the public interest," the FCC said.
Mar. 2, 2015, 8:23 PM
- Les Moonves said on CNBC last month that CBS was "very happy being alone," and the CEO doubled down on that talk at the Morgan Stanley Technology, Media and Telecom conference.
- Moonves says his COO tells him that CBS will be a $100 stock in four years, so buyers or merger partners like Time Warner (NYSE:TWX) or Viacom (VIA, VIAB) would have to pay "a very high price." CBS shares gained 4.5% Monday to close at $61.75.
- He also expressed little concern about smaller cable bundles or any lack of negotiating power by eschewing a merger, saying CBS will be in every bundle. "People can't live without CBS ... We like the hand we're playing."
- The company faces new negotiations with DirecTV (NASDAQ:DTV) and Cablevision (NYSE:CVC) at the end of the year.
- Previously: AMC Networks finally looking for a deal? (Feb. 25 2015)
- Previously: Cumulus higher in late trade as CBS M&A chatter flies (Feb. 24 2015)
Feb. 23, 2015, 3:53 PM
- DirecTV (NASDAQ:DTV) is off 0.3% as Brean downgrades shares, noting that the arbitrage gap between DTV's price and AT&T's offer has "largely closed."
- The analysts downgraded the satellite provider to Hold, from Buy.
- Brean sees "continued momenmtum" in the U.S. and stabilizing results in Latin America, and think DTV will make AT&T stronger financially.
Jan. 26, 2015, 7:39 AM
- AT&T (NYSE:T) agrees to acquire Nextel Mexico from NII Holdings and its network of ~76M people in the Mexican wireless network for $1.875B.
- AT&T plans to integrate Nextel Mexico with Iusacell, which AT&T agreed to buy last year in a deal valued at $2.5B at the time.
- The acquisition is subject to a bankruptcy auction and approvals by the U.S. Bankruptcy Court for the Southern District of New York, which is currently overseeing the restructuring of NII Holdings; the deal also is subject to regulatory approval by Mexico's telecom regulator.
Jan. 18, 2015, 12:57 PM
- TechCrunch reports Google (NASDAQ:GOOG) is interested in acquiring Softcard, the mobile payments platform launched by AT&T (NYSE:T), Verizon (NYSE:VZ), and T-Mobile (NYSE:TMUS) in 2010 - it was previously known as Isis, before changing its name for obvious reasons. Though Softcard's owners have invested hundreds of millions in the venture, sources state Google's purchase price could be below $100M.
- Like Apple Pay and Google Wallet, Softcard relies on NFC radios to enable transactions. And like Wallet, it has struggled to get off the ground, as U.S. consumers overwhelmingly stick with card swipes. Hard data on Apple Pay usage remains limited for now.
- Softcard recently laid off 60 employees. Meanwhile, it was reported in 2013 that Google had spent $300M on Wallet-related acquisitions, with little to show for it. The adoption of EMV (chip-and-PIN) readers by U.S. retailers could give NFC solutions a boost, by making card payments a little less convenient.
- The WSJ reports Google is partnering with consulting giant PwC to bid on a $2B+ contract to update the DoD's electronic health records system. PwC says Google's tools could both improve the system's security and performance, and lower costs. A group featuring IBM, HP (NYSE:HPQ), and CSC has made a rival bid.
- Ad tech firm Marin Software (NYSE:MRIN) provides some encouraging mobile search data ahead of Google's Jan. 29 Q4 report. A Marin study found mobile accounted for 49% of Q4 U.S. search ad spend, up from 42% in Q3, and that smartphone ad click rates were 38% higher than PC rates (thanks in part to accidental clicks?). On the other hand, mobile still only accounted for 32% of conversions.
- Medium writer Backchannel provides a deep dive into Google Search's evolution in an era where users increasingly want search engines to know the precise meaning of their queries. Part 1 looks at Google's efforts to optimize for mobile (aided by its Knowledge Graph and Google Now). Part 2 looks at Google's real-world research into the information needs of users. Part 3 looks at Google's investments in A.I./deep learning to deliver far more intelligent search results and spontaneously surface useful information.
Jan. 16, 2015, 2:59 PM
- AT&T's (T +1.6%) $2.5B purchase of Mexican mobile carrier Iusacell is officially on the books. Ma Bell has used the occasion to reiterate the merger will allow it to offer cross-border mobile services. "It won't matter which country you're in or which country you're calling it will all be one network, one customer experience."
- AT&T has also announced Thaddeus Arroyo, formerly the president of AT&T's Technology Development unit and before that its CIO, will run Iusacell. Adrian Steckel, until now Iusacell's CEO, will "assist Arroyo with the integration of Iusacell into AT&T."
- Separately, Reuters reports China Telecom (CHA -2.2%) is "preparing a possible bid" to build and run a Mexican wholesale mobile network expected to cost $10B over 10 years. The network, mandated by Mexico's 2013 telecom reform bill, aims to allow America Movil's (AMX -0.6%) rivals (such as Iusacell) to provide better coverage without having to rely on AMX, which is still looking for a buyer for the Mexican assets it's shedding to bring its share below 50%.
Jan. 9, 2015, 5:00 AM
- Mexican broadcaster Grupo Televisa (NYSE:TV) has completed the sale of its 50% stake in mobile operator Iusacell to JV partner Grupo Salinas, clearing the way for AT&T (NYSE:T) to acquire the cellphone company.
- Televisa used some of the proceeds from the $717M sale to buy Mexican cable company Cablevision Red, a regional operator with around 650K subscriptions, for about 3B pesos ($204M).
- Previously: AT&T receives approval for Iusacell deal (Dec. 22 2014)
Dec. 31, 2014, 8:42 AM
- Streaming: Sony (NYSE:SNE), HBO (NYSE:TWX), CBS (NYSE:CBS), and Dish Networks (NASDAQ:DISH) are set to unveil streaming products in 2015. The theory of the companies that the skinny bundles will draw in more cord-cutters and cord-nevers than they will cannibalize current pay-TV subscribers will be put to the test. The rush of streaming options could help or hurt Netflix (NASDAQ:NFLX) depending upon which analysis an investor leans on.
- Theater traffic rebound: Exhibitors (CNK, RGC, AMC, CKEC, IMAX) and movie studios (LGF, VIA, VIAB, DIS, FOXA, CMCSA, TWX) maintain that the decline in theater attendance in 2014 (-6%) was due to a slate of films light on blockbusters. A bounce is forecast for 2015 with high-profile films such as Avengers: The Age of Ultron, The Hunger Games: Mockingjay Part 2, Fifty Shades of Grey, Jurassic World, Spectre (James Bond), and Mission Impossible 5 all set to premiere - along with the reboot of the Star Wars franchise in December. Capex spending on theater upgrades could also help boost in-theater spending and average ticket price for exhibitors.
- Mergers: If regulators allow the Comcast-Time Warner Cable (NYSE:TWC) and AT&T-DirecTV (NASDAQ:DTV) mergers to sail through it could clear a path for other media combinations, note analysts. Potential buyers include Alibaba (NYSE:BABA), Wanda Group, Softbank (OTCPK:SFTBY), and a TWX-rebuffed 21st Century Fox (NASDAQ:FOXA). Content producers which could be targets include Starz (NASDAQ:STRZA), Lions Gate (NYSE:LGF), DreamWorks Animation (NASDAQ:DWA), AMC Networks (NASDAQ:AMCX), and Scripps Networks (NYSE:SNI). A split-up Madison Square Garden (NASDAQ:MSG) could also be enticing.
Dec. 22, 2014, 1:40 AM
- Mexico's Federal Competition Commission has approved AT&T's (NYSE:T) $1.7B purchase of local cellphone company Iusacell.
- The competition regulator set conditions on the deal to "avoid risks to the process of competition" in markets where Iusacell would compete with America Movil (NYSE:AMX), which previously counted AT&T as a minority investor.
- AT&T sold its America Movil shares in the summer, before announcing its deal with Iusacell in November.
Nov. 7, 2014, 4:22 PM
- Iusacell has 8.6M Mexican mobile subs, and a 3G network that covers 70% of the country's population (120M). AT&T (NYSE:T) is paying $2.5B in cash to buy Iusacell from parent Grupo Salinas, after accounting for debt. The deal is expected to close in Q1 2015.
- AT&T highlights Mexico's relatively low mobile/smartphone penetration rates while discussing the deal, as well as synergies with its U.S. mobile ops and recent regulatory moves meant to loosen America Movil's (NYSE:AMX) market dominance. AT&T was previously believed to be interested in Mexican assets AMX is looking to sell to appease regulators.
- AT&T "plans to expand Iusacells network to cover millions of additional consumers and businesses in Mexico." At the same time, AT&T won't be acquiring Iusacell's Total Play pay-TV/wireline broadband business. DirecTV (NASDAQ:DTV), which AT&T is set to acquire, owns 41% of local satellite TV provider Sky Mexico.
- Separately, AT&T has set a 2015 capex budget of $18B, down from 2014's $21B. The carrier declares its Project VIP network expansion project to be ahead of schedule, with the 4G expansion part largely complete.
- T +0.7% AH. AMX -0.6%.
Oct. 7, 2014, 2:15 PM
- America Movil's (AMX -0.1%) planned Mexican telecom asset sale could extend beyond Mexico's eastern coast, Carlos Slim tells Bloomberg. AMX has already announced plans to sell Eastern Mexican assets to appease regulators who want the carrier's local telecom share to fall below 50%.
- AT&T (NYSE:T), which recently sold its AMX stake to Slim for $5.6B, has suggested it's interested in the assets. For now, Slim only says AMX is "working with the potential buyers to have an agreement."
Sep. 25, 2014, 11:14 AM
- DirecTV (DTV -0.2%) confirms that its shareholders approved the merger of the company with AT&T.
- The transaction is expected to be completed in the first half of 2015 after a myriad of regulatory hurdles are cleared.
Sep. 23, 2014, 1:01 PM
- Tech news site BSN, not historically a major source for telecom M&A rumors: "Sources close to both Vodafone (VOD +0.3%) and AT&T (T -0.7%) have said that executives from the two companies are laying the groundwork for a possible acquisition, merger or partnership ... AT&T is seen to take ownership of Vodafone and its various business units around the globe by first quarter of 2015."
- Vodafone has turned positive on the report; shares were previously down over 1%. AT&T/Vodafone rumors are, of course, nothing new. However, the DirecTV deal and AT&T's reported displeasure with Vodafone's wireline expansion efforts have led to a measure of investor skepticism about them.
- SoftBank has also been rumored to be a potential Vodafone suitor, given the company has abandoned (for now) its efforts to merge Sprint with T-Mobile, and is sitting on an Alibaba stake currently worth a pre-tax $70B.
Sep. 22, 2014, 12:06 PM
- Otter Media, a JV owned by AT&T (T +0.1%) and ex-News Corp. president Peter Chernin, is buying a controlling stake in leading YouTube content provider Fullscreen. Re/code states the deal will likely value Fullscreen in the $200M-$300M range.
- Fullscreen's network covers 50K+ content creators, and is responsible for 4B monthly video views. Yahoo and Time Warner had reportedly expressed interested in the startup earlier in 2014.
- In March, Disney agreed to buy fellow YouTube content provider Maker Studios for up to $950M. With Maker producing 5.5B monthly video views at the time of the deal, AT&T/Chernin may have gotten a relative bargain. Look for AT&T to promote Fullscreen's content to its U-verse and/or mobile subs.
Sep. 16, 2014, 5:44 PM
- A top AT&T (NYSE:T) executive says the company is open to acquisitions in Mexico, where America Movil (NYSE:AMX) has said it would sell off parts of operations to cut its market share to below 50% from 70% to avoid a regulatory crackdown, creating a rare opening for an acquirer to get a foothold in the country.
- AT&T's attention is focused on closing the $49B deal for DirecTV, but Chief Strategy Officer John Stankey says Mexico is a fast-growing market of interest to the company, and that AT&T has the wherewithal to do other deals if opportunities arise.
Sep. 11, 2014, 2:05 PM
- The state attorneys general now working with the Justice Department to determine whether Comcast's deal to buy Time Warner Cable is legal have expanded their investigation to include AT&T's (T +0.2%) proposed $48.5B deal to buy DirecTV (DTV +0.1%), Reuters reports.
- New York and California are part of the multi-state review, according to the report.
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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