Yesterday, 1:47 PM
- After learning which way AT&T (NYSE:T) went (high) and which way Verizon Wireless (NYSE:VZ) went (low) in the 11-week FCC wireless spectrum auction, most attention focused on Dish Network (NASDAQ:DISH): What are they up to?
- The satellite firm took just short of half of the available licenses (and saved over $3B by cannily working through small-business partners) but doesn't offer mobile service -- yet.
- Dish's fortunes in this auction were linked to those of Verizon, which is widely considered a potential buyer or lessee of Dish's spectrum assets. But Dish's Charlie Ergen has pursued wireless firms before (MetroPCS and Sprint (NYSE:S)) and may see wireless mobile as the next path forward from a slower-growing business.
- “I think [Ergen's] strategy is built around a confidence that spectrum will only become more valuable going forward,” says former FCC commissioner Robert McDowell.
- DISH closed the day out down 4.3%, slightly below where it was sitting before the auction results were released.
Thu, Jan. 29, 1:04 PM
- Par for the course in what has become intense competition in wireless telecom, the FCC's latest spectrum auction (AWS-3) received record bids of $44.9B in 341 rounds that started Nov. 13.
- Expectations were that the total might come between $10B-$20B, above the $10B reserve price. Only a very few investors thought the sale might top $35B.
- Paired spectrum licenses -- those focused on major metro areas, and without government users that must be moved off first -- got the big bids.
- Analysts anticipated that AT&T (NYSE:T) may have been spending more than Verizon Wireless (NYSE:VZ) -- upward of $20B -- as news came that AT&T entered into $11B in credit pacts.
- The high total also means multiple bidders aside from AT&T and Verizon likely fought hard for licenses in major metros including New York and Los Angeles. Sprint (NYSE:S) didn't take part, though Dish Network (NASDAQ:DISH) did.
- Winners will be released by the FCC within days.
Mon, Jan. 26, 1:57 AM
- Not only is Google (NASDAQ:GOOG) preparing a new cellphone service that will dial up pressure on the wireless industry’s business model, Cablevision (NYSE:CVC) is also prepping one.
- Google’s new package will hunt through cellular connections provided by Sprint (NYSE:S) and T-Mobile (NYSE:TMUS) and WiFi "hot spots," picking whichever offers the best signal to route calls, texts and data, WSJ reports.
- Meanwhile, Cablevision will start offering Freewheel next month, a WiFi-only mobile-phone service.
- Such services pose a challenge to traditional telecom carriers, including AT&T (NYSE:T) and Verizon (NYSE:VZ).
- Previously: Report: Google to sell phone plans via Sprint, T-Mobile (Jan. 21 2015)
- Previously: Analysis: Cable WiFi services to go mainstream (Oct. 06 2014)
Thu, Jan. 22, 11:04 AM
- AT&T (T -1.7%) and Sprint (S -2.5%) are joining Verizon in selling off (in spite of a market rally) after Big Red reported 2M Q4 postpaid net adds (including 672K phone adds), but also stated its wireless service revenue growth fell to 2.8% from Q3's 4.8% and that wireless EBITDA margin fell to 42% from 47% a year ago. Verizon also disclosed retail postpaid churn rose to 1.14% from 0.96% a year ago.
- Verizon's service growth, margin, and churn reflect both strong phone upgrade activity (due to iPhone 6 sales and phone upgrade plan adoption) and a U.S. mobile price war that isn't showing any signs of letting up as 2015 commences.
- Meanwhile, Verizon's Q4 postpaid adds, together with T-Mobile's strong Q4 adds, suggest AT&T may have joined Sprint in losing postpaid phone subscriber share during the quarter. Sprint has said it added 30K postpaid subs in calendar Q4 - postpaid phone adds were apparently still negative - and AT&T disclosed last month churn is trending higher in Q4.
- AT&T reports on Jan. 27, and Sprint on Feb. 5. Sprint jumped in the final minutes of trading yesterday on a report that Google is getting ready to sell phone plans on an MVNO basis while using Sprint and T-Mobile's networks.
Wed, Jan. 21, 4:09 PM
- Two day after reporting on Google's (GOOG +2.2%) SpaceX investment (confirmed a day later), The Information reports Google (GOOG +2.2%) is getting ready to "sell mobile phone plans directly to customers and manage their calls and mobile data over a cellular network."
- Google won't be building its own network, but will instead operate as an MVNO leveraging Sprint (S +5.8%) and T-Mobile's (TMUS +1.9%) networks. Deals for wholesale network access are reportedly on the way. Sprint and (to a lesser extent) T-Mobile have caught a bid on the report.
- Becoming a U.S. mobile carrier with Sprint/T-Mobile's help risks upsetting AT&T (NYSE:T) and Verizon (NYSE:VZ), who still tower over the local telecom landscape. However, it also gives Google a chance to experiment with novel/low-cost service plans, perhaps with the hope that other carriers (in the U.S. and elsewhere) will follow suit. Google also might be betting Android is too well-entrenched at this point for AT&T and/or Verizon to respond too harshly.
- Last April, The Information reported Google has discussed offering mobile services in Google Fiber markets. Q4 results arrive in eight days.
- Update: The WSJ is backing up The Information's report. It adds Sprint is "hedging its bet by putting a volume trigger into the [Google] contract that would allow the deal to be renegotiated if Google’s customer base swells."
Fri, Jan. 16, 6:19 PM
- Through its existing partnership with Wal-Mart, Sprint's (NYSE:S) Virgin Mobile brand is offering new prepaid shared data plans: A 2-line, 4GB plan goes for $65/month; a 3-line, 8GB plan goes for $90/month; and a 4-line, 12GB plan goes for $115/month.
- Virgin/Wal-Mart are also selling new individual prepaid plans: $35/month for 300 minutes, unlimited text, and 2.5GB of unthrottled data, and $45/month for unlimited talk/text and 2.5GB of unthrottled data.
- Sprint is abandoning the Virgin Mobile Custom brand (offered via Wal-Mart since last August), which the carrier says led to confusion among would-be customers. However's it's keeping Custom's ItsOn platform, which allows a primary account holder to decide how much of a shared data bucket goes to a particular user, as well as buy additional data, through an app.
- T-Mobile (NYSE:TMUS), meanwhile, has rolled out its Simply Prepaid plans. $40/month gets unlimited talk/text and 1GB of 4G data (3G speeds beyond that); an extra $10 and $20 respectively yields 3GB and 5GB of 4G data.
- Both carriers may have gained prepaid share in Q4: Sprint had 410K prepaid net adds, and T-Mobile 266K branded prepaid net adds. Sprint's calendar Q4 (FQ3) report arrives on the morning of Feb. 5.
Thu, Jan. 15, 5:24 PM
- A day after the WSJ reported RadioShack (NYSE:RSH) is prepping a bankruptcy filing that could happen as soon as next month, Bloomberg has confirmed the scoop, and adds the electronics chain is in active talks with Sprint (NYSE:S) to sell the leases for some of its stores.
- RadioShack is reportedly looking to "emerge from bankruptcy with 2,000 to 3,000 stores, compared with the more than 4,000 it now has." Sprint is an eyebrow-raising potential buyer, given the carrier has been aggressively cutting costs and is less than a year removed from shuttering 55 stores.
- RadioShack fell 35.6% in regular trading to $0.264.
Thu, Jan. 8, 1:07 AM
- Sprint (NYSE:S) pre-announces it had 30K postpaid net subscriber adds in FQ3 (calendar Q4). That's a marked improvement from an FQ2 net loss of 272K subs, and no doubt has much to do with Sprint's aggressive promotions during the Marcelo Claure era.
- Postpaid phone net adds are apparently still negative, but Sprint says they "nearly" turned positive in December. Meanwhile, take rates for Sprint's (subsidy-eliminating) device financing plans rose to 50% during the month.
- Prepaid net adds rose to 410K in FQ3 from just 35K in FQ2. Wholesale net adds fell to 527K from 827K. Sprint says it had "the highest number of postpaid gross additions in three years," and that postpaid phone gross adds rose 20% Y/Y.
- Full FQ3 results are due in February. On Wednesday, top low-end rival T-Mobile reported 1.28M Q4 branded postpaid net adds (1.04M phone), and 266K branded prepaid net adds.
Dec. 31, 2014, 2:31 PM
- "AT&T (T -1.1%) will find new ways to cause their customers pain [in 2015] - especially those still on grandfathered unlimited plans," predicts T-Mobile (TMUS +0.3%) CEO John Legere, feisty as ever while making his 2015 predictions. The FTC recently sued AT&T for throttling the data speeds of unlimited plan users.
- Legere, whose company has unleashed a margin-crimping price war against over the last two years, also forecasts AT&T will launch a "knock off" version of T-Mobile's Data Stash feature, which lets users roll over unused data from monthly buckets for up to 12 months. "The fine print will be massive, and they’ll miss the first and most important step in the process – which is to stop punishing their customers with domestic overages and instead get rid of them."
- He isn't any kinder to Verizon (VZ -0.8%), predicting Big Red will "keep trying to baffle American wireless customers with BS promos, like the one they did this year telling customers they could get a free iPhone 6 (don’t forget to read the small print!), as well as misleading advertising about everything from coverage maps to device trade-ins."
- As for share-losing Sprint (S +0.6%), Legere sees them "continue throwing out campaigns, offers and promotions – anything to see if it sticks." By mid-year, he expects the carrier to "realize they can’t slash their way to growth and start to invest in their network and customer care."
- Two things Legere has kind words for (besides T-Mobile): 1) Apple Watch (NASDAQ:AAPL), which he predicts will "mark the tipping point when wearables go from niche to mainstream." 2) Phablets, which he expects will see 50% sales growth next year and thereby boost data usage.
- One positive prediction for the industry in general: Legere forecasts 2/3 of devices sold next year by carriers will be subsidy-free, up from 41% in 2014. The margin improvement that has come from moving customers from subsidies to early-upgrade and installment plans has been a silver lining for the industry during its price war.
Dec. 17, 2014, 4:59 PM
- Moody's has cut Sprint's (NYSE:S) corporate family debt rating to B1 (highly speculative) from Ba3 (non-investment grade speculative). Likewise, Sprint's probability of default rating has been raised to B1-PD from Ba3-PD, and its senior unsecured rating to B2 from B1.
- Moody's, echoing more than a few equity analysts: "Today's rating action reflects our expectation that intense competitive challenges and Sprint's limited ability to respond effectively will lead to a sustained period of very weak earnings and cash flow. Consequently, leverage is likely to increase, which when coupled with negative pressure on cash flow from installment billing plans and its phone leasing option, is expected to lead to a steady deterioration in Sprint's liquidity position."
- The agency's outlook is negative, reflecting what it believes to be "limited ability to reverse current trends in the foreseeable future."
Dec. 16, 2014, 6:37 PM
- Two months after fining AT&T $105M for unauthorized charges related to mobile content and services (i.e. cramming), the FCC is set to levy a similar fine on Sprint (NYSE:S), per agency officials.
- FCC commissioners still have to vote on the penalty. The Consumer Financial Protection Bureau is also reportedly thinking of taking action.
- Earlier: Sprint falls below $4
Dec. 16, 2014, 10:01 AM
- Sprint (S -2.1%) is now down 36% from where it traded prior to a disappointing Nov. 3 FQ2 report, and down 63% YTD.
- Aside from worries about postpaid share losses and the aggressive promotions aimed at putting an end to them, a declining high-yield debt market could be taking a toll.
- Sprint had $27B in net debt at the end of FQ2, and might need to raise more funds ahead of the FCC's 2016 broadcast spectrum auction.
Dec. 12, 2014, 6:56 AM
- SoftBank (OTCPK:SFTBY) will soon downsize its Silicon Valley offices, Reuters reports, signaling the company won't revive efforts to buy T-Mobile (NYSE:TMUS).
- The Japanese telecommunications company is also looking to rent out one of two buildings it leased at an annual cost of over $3M, which it had previously designated for T-Mobile.
- The "bulk" of its West Coast manpower is now set to be transferred elsewhere, including the dispersal of development engineers to Sprint (NYSE:S) headquarters in Kansas.
Dec. 10, 2014, 1:02 PM
- "We believe Sprint (S -5.7%) will be the most negatively impacted by competitive responses, and we think the stock is overvalued after factoring in $8B in expenditures for the  broadcast spectrum auctions," says Oppenheimer's Tomothy Horan, downgrading the carrier to Underperform.
- Horan notes Sprint, whose margins are getting pressured by major promotions launched in an attempt to halt postpaid share losses, is trading at 8.8x his firm's 2016 EBITDA estimate, nearly 2x above the multiples for other carriers.
- Like Evercore, Horan thinks the company will have to raise more capital. Unlike Evercore, he expects the funds to be raised via stock rather than debt.
- Shares now -60% YTD, and at their lowest levels since the SoftBank deal closed. They fell yesterday after Verizon and AT&T both suggested the U.S. mobile industry's price war will take a toll on Q4 results.
Dec. 9, 2014, 9:48 AM
- With price pressure from rivals as intense has ever, Verizon has warned it expects to see "short-term pressure" on its wireless margins and EPS, and that retail postpaid disconnects are "trending higher" both Q/Q and Y/Y.
- AT&T (T -2.8%) and Sprint (S -2.3%) aren't responding well to the news; the S&P is down 0.9%. Sprint's moves under new CEO Marcelo Claure (launched in an attempt to stem ongoing postpaid share losses) appear to be contributing to Verizon's challenges. Big Red has been gaining postpaid share relative to AT&T and Sprint, though not T-Mobile.
- T-Mobile (TMUS -5.1%) is down sharply, but shares had already sold off before the Verizon news, thanks to T-Mobile's convertible offering announcement.
Dec. 2, 2014, 11:49 AM
- In a promo that starts on Friday, Sprint (S -1.2%) will offer AT&T (T -1%) and Verizon (VZ -0.7%) subs who switch to Sprint unlimited talk/text plans similar to the ones they're currently on a 50% price cut.
- One catch: Users have to trade in their existing AT&T/Verizon phones, and make an unsubsidized purchase of a Sprint phone (via leasing, installment plans, or a regular retail purchase).
- A Sprint rep "will select the service plan that most closely matches the data allowance" of a user's AT&T/Verizon plan. The carrier will cover up to $350 worth of early termination fees and installment plan balances per line.
- The offer is the latest in a series of aggressive promos and price cuts launched by new Sprint CEO Marcelo Claure, who has made a priority out of halting postpaid share losses. In addition to AT&T/Verizon, the promo takes aim at T-Mobile (TMUS -0.4%), which has been grabbing postpaid share (especially on the low-end) with its own aggressive offers.
- T-Mobile and Verizon's wireless service revenue respectively rose 10.6% and 4.8% in Q3, while AT&T and Sprint's fell 0.2% and 5%.
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