Chris DeMuth Jr. • 175 Comments
Helix Investment Research
Oct. 8, 2013, 5:49 PM
- Bloomberg reports AT&T (T) is close to selling its wireless tower portfolio (already confirmed to be on the block) to Crown Castle (CCI). The news service previously reported a sale could fetch $5B.
- Today's report comes only a month after American Tower announced a deal to buy private Global Tower Partners for $4.8B, and thereby significantly grow its own U.S. tower footprint.
- CCI +0.8% AH.
Sep. 24, 2013, 5:47 PM
- Using the LTE-Broadcast standard and spectrum it acquired from Qualcomm (QCOM) in 2011, AT&T (T) plans to create a mobile broadcast network to deliver video services to its subs. CEO Randall Stephenson hints the project has a 3-year ETA.
- AT&T's plans come even though Qualcomm's FLO TV mobile broadcast service (it used the spectrum sold to AT&T) crashed and burned in epic fashion. Nonetheless, Qualcomm is a major backer of LTE Broadcast, and is integrating the technology into its baseband chips.
- Qualcomm argues LTE Broadcast's broader chip/phone support, integration with existing LTE networks and spectrum, and ability to let carriers quickly change what kind of content is broadcast at a particular base station will allow it to succeed where FLO TV failed.
- Stephenson also mentioned AT&T is close to selling its wireless tower assets. A sale could yield AT&T ~$5B in cash it could use to either pay down debt or make a European acquisition.
- Previous: AT&T closes ATNI deal, provides business update
Sep. 20, 2013, 5:02 PM
- The FCC has signed off on AT&T's (T) $780M purchase of Atlantic Tele-Network's (ATNI) Allied Wireless unit, after securing some concessions. AT&T has promised to launch 3G HSPA+ and 4G LTE services in Allied's spectrum within 15 and 18 months, respectively; to provide roaming services for the rural carrier's 3G EV-DO network at least until June '15; and to give existing subs a phone comparable to their current unit for free.
- AT&T says it expect to move Allied customers to the AT&T network by mid-2014.
- The FCC had previously expressed concerns about the impact of the deal, which AT&T is making to get its hands on valuable spectrum, on Allied's prepaid subs.
- AT&T also announces it expects its Q3 smartphone upgrades to rise Y/Y, and that it will add 1M smartphone subs in the quarter. But it also expects upgrades to drop Y/Y in Q4 thanks in part to a new 24-month upgrade policy.
- AT&T sold 6.8M smartphones in Q2, a record for the quarter. The company closed Q2 with 73% of its postpaid base using smartphones. Higher smartphone sales pressure AT&T's near-term margins, but (to the extent feature phone users are converted) also boost the number of subs using costlier smartphone service plans.
- Also: 1) Total U-verse subs (TV and Internet) are expected to top 10M at the end of Q3; they rose by 864K in Q2 to 9.4M. 2) Consumer wireline growth is expected to match Q2 levels (2.4% Y/Y). 3) "Economic pressure on legacy services" continues to hurt business wireline sales; total wireline revenue fell 1.4% Y/Y in Q2.
- Confirming a Bloomberg report, AT&T says it's "exploring opportunities to monetize some or all of its remaining wireless tower assets."
- The company's 2013 guidance (provided in January) is unchanged. Q3 results arrive on Oct. 23. Shares are nearly unchanged AH.
Sep. 17, 2013, 12:55 PM
- Bloomberg reports AT&T (T +0.6%) is looking for a buyer for its massive cell tower portfolio in a deal that could be worth $5B.
- American Tower (AMT -0.3%), Crown Castle (CCI +0.1%), and SBA (SBAC) are natural potential suitors for part or all of the portfolio. AMT is fresh off announcing a $4.8B deal to acquire private tower owner Global Tower, whose assets are mostly U.S.-based.
- AT&T has spiked slightly higher on the report. A tower sale would help Ma Bell pay down some of the $75.2B in debt it held at the end of Q2, and thus strengthen its balance sheet as it turns its eyes toward Europe.
- Back in March, RBC speculated AT&T could sell its tower assets for a "mid-$5 billion" or higher price tag.
Sep. 13, 2013, 10:41 AM
- Sources tell Bloomberg Orange (ORAN -0.9%) and Deutsche Telekom (DTEGY.PK) are delaying the sale of their Everything Everywhere U.K. mobile JV (has an early 4G lead) as they wait for AT&T (T +0.5%) to make its expected entry into Europe. AT&T has reportedly eyed a number of European assets, including EE.
- Likewise, Bloomberg joins other news sources in reporting Telefonica (TEF +0.2%) is thinking of growing its Telecom Italia (TI -1.5%) stake by taking full control of holding company Telco.
- Debt-laden European carriers have been shedding assets left and right. But they're now showing an interest in getting bigger, thanks both to AT&T and a growing willingness by regulators to sign off on consolidation.
- Orange CEO Stephane Richard has predicted approval of a proposed merger of Telefonica and KPN's German units, which would lower the number of mobile carriers in Europe's largest market to 3, would "create an [M&A] earthquake" on the continent. Richard added Orange would attempt to grow its Spanish/Polish positions, and consider wireline acquisitions in Belgium and Romania, if regulators don't object.
- EU antitrust chief Joaquin Almunia has said there's no "magic number" for how many carriers need to be in a market. Meanwhile, proposed telecom rules stand to encourage M&A, both by hurting carrier profitability in individual markets and by harmonizing rules across markets.
- Vodafone (VOD +0.3%) is expected to invest a chunk of its Verizon Wireless windfall in European assets. And there's plenty of speculation AT&T will make a bid for the giant international carrier.
Sep. 11, 2013, 3:17 AM
- AT&T (T) has completed the purchase of spectrum from Verizon Wireless (VZ) for $1.9B.
- AT&T will use the spectrum, which covers 42M people in 18 states, for its 4G LTE network. The carrier expects to complete the deployment of the infrastructure by the summer of next year.
- In addition to money, Verizon also received spectrum in California, Phoenix and Portland.
Sep. 9, 2013, 8:51 AM
Sep. 9, 2013, 4:21 AM
- Kabel Deutschland (KBDHY.OB) shareholders reportedly fear that Vodafone (VOD) won't reach the required level for its €7.7B acquisition of the German cable operator to go through.
- Vodafone has stipulated that 75% of Kabel Deutschland shares need to be tendered by Wednesday in what is the first stage of a two-step approval process. The U.K. operator could lower the level before the deadline but said it has no intention of changing the conditions.
- Failure to buy Kabel Deutschland could make Vodafone vulnerable to a takeover bid from AT&T (T), which is thought to be interested in the British carrier's European mobile assets but not its cable operations.
Aug. 29, 2013, 11:15 AM
- With the company still only sporting a market cap of $155B, analysts think Vodafone (VOD +8.1%) could go higher still if it sells its Verizon Wireless stake to Verizon for $130B (net proceeds will likely be lower due to taxes), as it's reportedly close to doing.
- Merrill sees 20% upside from current levels, and hedge fund analysts talking to Notable Calls think Vodafone is worth $40/share even if it only receives $120B. David Einhorn won't be complaining if that happens.
- Meanwhile, Bernstein is echoing a March BofA/Merrill report by arguing AT&T (T +1.2%), hungry to expand internationally, could buy what's left of Vodafone following a Verizon Wireless deal. Bloomberg reported in June AT&T "remains interested" in Vodafone's assets, among various other international properties.
- More on Vodafone/Verizon
Aug. 8, 2013, 1:10 PM
- Still in the process of digesting MetroPCS, T-Mobile USA (TMUS +4.4%) says it isn't interested in outbidding AT&T (T -0.7%) for Leap Wireless (LEAP -1.2%).
- Leap has slipped a little on the news, but is still at $16.53. AT&T agreed to buy Leap for $15/share in cash and the net proceeds from the sale of spectrum previously bought for $204M.
- T-Mobile continues to trade higher thanks to its Q2 results, replete with strong (iPhone-driven) postpaid net adds, and solid 2H subscriber guidance.
- Citi (Neutral) isn't crazy about T-Mobile's numbers. The firm notes service revenue still fell 7.5% Y/Y to $5.1B (below Citi's $5.22B estimate) and estimates OIBDA (hurt by iPhone sales) fell 58% Y/Y to $739M (below Citi's $1.1B estimate) after adjusting for Value Plan accounting changes.
- The firm remains concerned about T-Mobile revenue/OIBDA growth prospects in light of " the rapid maturation of the prepaid category & competitive pressures in its postpaid segment."
- CEO John Legere asserts T-Mobile is "taking customers from AT&T at a ratio of two to one." If true, that represents a big reversal from recent trends.
Jul. 15, 2013, 7:23 PM
"We believe AT&T (T) is overpaying for Leap’s (LEAP) spectrum," says BMO's Kevin Manning, expressing a common view. He estimates AT&T is paying $5.25B for Leap after factoring debt and lease obligations, or $2.31/MHz/POP. That's well above the prices attached to recent spectrum deals (I, II), something attributed to a desire to keep Leap out of T-Mobile's (TMUS) hands. Much of Leap's spectrum resides in the AWS band, where T-Mobile has a huge presence. Though few analysts expect a higher bid, Leap closed 13% above AT&T's offer price, in part due to expected spectrum proceeds. One unanswered question: What will happen to AT&T's AIO prepaid brand, given the carrier's plans to support Leap's Cricket brand? (AT&T/Leap: I, II)| Jul. 15, 2013, 7:23 PM | 4 Comments
Jul. 14, 2013, 2:21 AMTrading volume in Leap Wireless (LEAP) options leapt to 7,139 contracts vs an average of 1,320 contracts on Friday prior to the announcement that AT&T (T) has agreed to acquire the smaller carrier for $1.18B. The call-to-put ratio was 20-1. "It appears that prior knowledge of this takeover may have been leaked and traded on," says options analyst Ophir Gottlieb. The authorities are pretty good at identifying the people who carry out these trades, including with deals involving Onyx Pharmaceuticals and Heinz. | Jul. 14, 2013, 2:21 AM | 9 Comments
Jul. 12, 2013, 5:23 PM
More on AT&T/Leap: AT&T is paying $1.18B for Leap's equity, and assuming $2.8B in net debt. Leap shareholders will also receive net proceeds from the sale of spectrum Leap bought for $204M last August. Leap has 5M prepaid subs on a network covering 96M people, and AT&T says it will keep the Cricket brand and expand its reach. But this deal is mostly about acquiring Leap's spectrum (covers 137M people), much of which is unused and could be of use in AT&T's 4G buildout, especially in urban areas. Expect the FCC to closely scrutinize the deal; will new leadership yield a different outcome than the one for the T-Mobile deal? LEAP now +106.5% AH to $16.48, investors are betting on a higher bid. TMUS +4.1%. T -0.4%. (PR)| Jul. 12, 2013, 5:23 PM | 3 Comments
Jul. 12, 2013, 5:07 PM
Jul. 12, 2013, 1:26 PM
Hulu's old media owners (DIS, CMCSA, FOXA) have decided not to sell the company, or even a stake in it, and will instead provide a $750M cash infusion while maintaining their current equity positions. Reported demands for a slew of streaming/licensing restrictions likely helped scuttle buyout/investment talks with the likes of DirecTV (DTV), Time Warner Cable (TWC), and AT&T/Chermin (T), much as they helped scuttle 2011 talks. Netflix (NFLX +4.4%) is probably pleased. (previous)| Jul. 12, 2013, 1:26 PM | 18 Comments
Jul. 9, 2013, 3:31 AM
Hulu has reportedly received acquisition offers from DirecTV (DTV) and a consortium comprising Guggenheim Digital Media and private-equity firm KKR (KKR), as well as from a group made up of AT&T (T) and Chernin. Time Warner Cable (TWC) offered to acquire a stake and become an investor alongside Hulu's owners, 21st Century Fox (FOXA), Disney (DIS) and Comcast (CMCSA). There's no word on bid amounts, although DirecTV has offered over $1B in the past.| Jul. 9, 2013, 3:31 AM