Tue, Sep. 22, 7:24 PM
- With most observers thinking any theoretical merger between T-Mobile (TMUS -1.1%) and Sprint (S +0.3%) would have to wait until a new U.S. administration (and John Legere saying "Oh yeah ... the only possible coming together of Sprint and T-Mobile is if we pick them up off the sidewalk"), analysts at Evercore say the two could combine network assets.
- It would be a sort of a merger, into a new company (a REIT in particular) that would hold their network resources. Bigger investments at lower cost would come, along with a speedier network once spectrum assets were blended.
- Given up, of course, would be the chance to differentiate, and snipe the rival over network power.
- Combined, the two control 255 MHz of spectrum, more than the 147 MHz at AT&T (T -0.9%) or the 116 MHz of Verizon (VZ -0.9%). A new "NetCo" would rent the network back to the two, as well as possibly others, and support MVNO customers.
- As a final entry in the "pro" column, the analysts note a combined network would make any future merger more headache-free.
Thu, Sep. 10, 4:43 PM
- Cablevision Systems (CVC -2.7%) is up more than 32% YTD, but Citigroup's sticking to its "contrarian" view that its movement of late is based on unlikely acquisition hopes.
- The firm's Jason Bazinet has a $21 price target on the shares along with a Sell rating. Shares closed today at $27.29 -- an implied downside of 23%.
- The stock's performance, he says, may be due to investor hopes that Altice (OTCPK:ATCEY) -- the french telecom that acquired Suddenlink -- could snap up Cablevision. But Citigroup thinks a target of the FiOS/wireline business of Cablevision competitor Verizon (NYSE:VZ) is far more likely.
- Without a sale, though, he figures fair value at $18/share for Cablevision, vs. $34/share with a sale.
- That's due to the firm's 25% probability of an Altice acquisition: "In effect, if Altice acquires Cablevision, we see $6 upside to the stock. But, if Altice acquires Verizon [wirelines], we see $10 downside in Cablevision's shares. That's a risk-reward we don't find attractive." In any case, CVC won't trade sideways, he says, with some kind of sale likely eventually.
- Previously: Cablevision up 7.2% as buy-minded Drahi drops name (Jul. 10 2015)
- Previously: Cablevision up 11% following Altice/Suddenlink tie-up (May. 20 2015)
Thu, Sep. 3, 9:15 AM
- Less than two months after TechCrunch reported a deal could happen, Verizon-owned (NYSE:VZ) AOL has announced it's acquiring mobile ad network owner Millennial Media (NYSE:MM) for $1.75/share, or $248M. The price represents a 30.6% premium to Millennial's Wednesday close, but is still well below a 52-week high of $2.40, and over 90% below Millennial's 2012 highs.
- The deal expands AOL's supply-side (publisher-facing) mobile ad footprint, including within international markets. Millennial claims over 65K apps are on its platform, and that it has over 800M "proprietary, anonymous user profiles" for ad targeting. It follows AOL's display ad deal with Microsoft, and comes ahead of the launch of Verizon's Go90 mobile video service.
- For Millennial, the deal provides an exit for a company that has been losing mobile ad share to the likes of Google, Facebook, Apple, and Twitter. It's expected to close this fall.
- MM +30% to $1.74.
Wed, Sep. 2, 6:05 PM
- The FCC has approved Frontier Communications' (FTR +3%) $10.54B purchase of wireline operations in California, Florida and Texas from Verizon (VZ +1.1%).
- The deal, which Verizon undertook in the wake of its $10.4B in bids in the AWS-3 wireless spectrum auction, had previously received approval from the Dept. of Justice.
- It still needs approval from public utilities commissions in California and Texas, though the key hurdles are behind it. The companies expect to close the transaction at the end of Q1 2016.
- Frontier focused on the broadband offerings it could bring: "By doubling our size, we will add scale and scope to our operations, strengthen our product and service offerings, and improve the customer experience," said Frontier CEO Daniel McCarthy. "Our goal is to deliver the life-changing benefits of broadband to an additional 750,000 households at speeds of 25Mbps/2-3Mbps across the entire Frontier multi-state footprint, including California, Florida and Texas, by the end of 2020."
Wed, Aug. 5, 10:01 PM
- AOL (NYSE:VZ) has shuffled its leadership, promoting Huffington Post CEO Jimmy Maymann into a spot with oversight of its consumer brands as well as Verizon's upcoming Go90 streaming video service.
- AOL chief Tim Armstrong says Arianna Huffington is leading the search for a new HuffPo CEO.
- The shuffle will mean AOL is reorganized into three businesses: consumer brands (Maymann's area), business-to-business platforms (ad tech), led by AOL President Bob Lord, and the new "Area 51" unit focused on strategic investment, led by CTO Bill Pence.
- Armstrong had no comment about a possible $300M deal for Millennial Media (NYSE:MM), but said: “We have a goal of becoming the largest mobile media platform whether that’s through investments or M&A. If you look at how aggressive we’ve been in the last 12 months ... you should assume we are serious. We are a company on the move right now.”
Wed, Jul. 8, 11:59 PM
- TechCrunch reports AOL, fresh off being acquired by Verizon (NYSE:VZ) for $4.4B, is interested in acquiring mobile ad network owner Millennial Media (NYSE:MM).
- The site, which is owned by AOL, reports hearing of a $300M-$350M price range, while cautioning "it will still be some weeks" before a deal is announced, should one happen. AOL is said to have begun "kicking the tires" on a Millennial deal weeks ago, before getting slowed down by the Verizon deal.
- Millennial closed on Wednesday with a $217M market cap. With the company forecasting 2015 revenue of $311M-$342M, the reported price range is equal to a modest ~1x forward sales.
- Millennial would significantly increase AOL and Verizon's mobile display ad footprint. Though Millennial has been struggling to deal with competition from Google (AdMob), Facebook, Apple (iAd), and Twitter (MoPub), the company still claimed to support 65K apps and reach 670M+ monthly unique users (175M in the U.S.) as of March 31. It has 750M+ anonymous user profiles for delivering targeted ads.
- It was only last week that AOL announced a deal to "assume management and sales responsibility" for Microsoft's display, mobile, and video ad inventory in the U.S. and 8 other markets.
- Two months ago: Millennial rises in wake of AOL/Verizon deal
Fri, Jun. 26, 11:59 PM
- Despite some friendly talk around consolidation, Cablevision (NYSE:CVC) is an "un-acquirable asset," says a key telecom industry analyst.
- Craig Moffett of MoffettNathanson thinks shares are overvalued and artificially high since a wave of roiling M&A action following the breakup of Comcast's takeover bid for Time Warner Cable.
- The company has too much competitive overlap with Verizon (NYSE:VZ) FiOS, he says.
- "After factoring in its already below-market trailing growth rates, and its FiOS-affected forward growth prospects, Cablevision's shares appeared markedly overvalued even before the latest round of speculation," Moffett writes.
- Today: CVC +4%.
Fri, Jun. 26, 3:24 PM
- While Verizon (NYSE:VZ) closed on its $4.4B deal for AOL on Tuesday, not every investor is settling for the $50/share price.
- About 60% of AOL shares were tendered. And at least 5% of shareholdings weren't sold to Verizon and their investors are seeking appraisal on the shares -- where a judge awards a higher price for the shares, and which they can do for a few months before they could abandon the plan and accept the deal.
- Appraisal requests are growing as an investing tactic after a record 40 cases were filed last year (and 28 so far this year).
- Objecting funds include Brigade Capital Management and Verition Fund Management. With AOL shares trading above $50 the past few weeks, some buyers were likely funds that intended to seek appraisal.
Tue, Jun. 23, 10:06 AM
- Just 42 days after announcing a deal, Verizon (VZ +0.8%) has wrapped its $50/share cash acquisition of AOL, as its tender offer expired at midnight last night.
- AOL will no longer be traded on the NYSE and is a wholly owned subsidiary of the telecom. Some 60.4% of shares were validly tendered, and other shares have been converted into a $50 cash right.
- Tim Armstrong will continue to lead AOL operations, but now by reporting to Marni Walden, Verizon's executive VP of product innovation and new businesses. Bob Toohey, president of Verizon Digital Media Services, will report to Armstrong.
- Previously: Verizon CFO: We're keeping Huffington Post, not buying Dish Network (Jun. 15 2015)
- Previously: AOL chief to net $179M from Verizon deal (May. 14 2015)
- Previously: Not the old AOL: Verizon purchase all about ads (May. 12 2015)
Thu, Jun. 18, 12:51 PM
- In another sign of content assets staying put at Verizon (VZ +1%) after its deal for AOL is complete, Arianna Huffington says she's signed a new four-year deal to stay at the helm of the Huffington Post.
- “After all my meetings and conversations with Tim [Armstrong] and the Verizon leadership, I am convinced that we will have both the editorial independence and the additional resources that will allow HuffPost to lead the global media platform shift to mobile and video,” Huffington reportedly says in a memo to staff.
- As Verizon agreed to a $4.4B deal to buy AOL last month, speculation centered on whether the telecom would keep content assets like Huffington Post and TechCrunch.
Mon, Jun. 15, 7:30 PM
- Verizon (NYSE:VZ) isn't looking to sell the Huffington Post, CFO Fran Shammo says. And despite the company's move into video, it's not interested in buying spectrum-rich Dish Network (NASDAQ:DISH) either.
- Speculation recently has centered on whether AOL's content assets, which include HuffPost as well as TechCrunch, were a fit in a $4.4B Verizon acquisition deal said to be focused on AOL's ad technology.
- Shammo said Verizon likes all of the AOL portfolio and hopes to keep it together. As for spectrum, he says if Verizon wanted more, it would have bought more at the last FCC AWS-3 auction.
- Previously: Not the old AOL: Verizon purchase all about ads (May. 12 2015)
- Previously: Report: Amid Verizon talks, AOL exploring Huffington Post spinoff (May. 12 2015)
- Previously: Verizon scoops up AOL for $4.4B (May. 12 2015)
Fri, Jun. 12, 5:19 PM
- Today in telecom consolidation speculation: While Dish Network (NASDAQ:DISH) and T-Mobile (NYSE:TMUS) have been talking about a deal with upsides for both (and shareholders have driven DISH up 2.6%, TMUS up 1.8% since word broke June 3), they aren't each other's only option.
- And much of what transpires there depends on T-Mo parent Deutsche Telekom (OTCQX:DTEGY) and what it wants to do with an asset that can command top dollar as perhaps the last attainable big U.S. cell provider.
- “They’re obviously controlled by a German company who has strategic initiatives, both in Europe and the United States, and they may not be in a position where they want to do anything," Dish chief Charlie Ergen said in a Bloomberg TV interview.
- From Dish's perspective: It doesn't need to rush, as it's making free cash flow and has time to sit on its large spectrum stockpiles yet. Ergen could look for a sale to Verizon (NYSE:VZ), or break the spectrum off into a separate company with a sale-leaseback. In any case, many deals that seemed well under way have been kiboshed by the mercurial Ergen.
- Fron T-Mobile's: Deutsche Telekom is reportedly worried about an overvalued Dish and getting too much of that stock. T-Mobile could probably command $49/share in a sale, or a 25% premium, says Gabelli's Sergey Dluzhevskiy. One company that wouldn't blink at that price would be Comcast (NASDAQ:CMCSA) in its own quad-play grab.
- Altice (OTC:ATCEY), which considered a run at Time Warner Cable (NYSE:TWC), could be a long-shot for T-Mobile, or even Charter (NASDAQ:CHTR). And with AT&T expanding in Mexico, how interesting would it be if América Móvil (NYSE:AMX) pumped up its U.S. presence with Big Magenta?
Fri, Jun. 5, 5:39 PM
- The current wisdom holds that Dish Network (NASDAQ:DISH) and T-Mobile's (NYSE:TMUS) combination bid might have a relatively easy time with regulators, and it shouldn't face debt problems either, says one analyst.
- “Dish bond covenants are very loose,” says Covenant Review analyst Scott Josefsberg, and the satellite provider would have “wide latitude to structure a transaction." Meanwhile, T-Mobile covenants allow for the firm to issue at least $10B more in debt. Dish Network has an enterprise value of $45.8B; T-Mobile's is $52.9B.
- Meanwhile, Citigroup's Michael Rollins says the other option is clear for spectrum-rich Dish: Sell itself to Verizon (NYSE:VZ).
- He thinks that's the likely outcome for a number of reasons, including the need for Verizon to keep up with AT&T/DirecTV, the spectrum shortage that Verizon currently faces heading into next year's incentive auction, and the chance for Dish to make a shift to IP video to "dramatically" increase magnitude and duration of video cash flows.
- He has Dish and T-Mobile rated at Buy and raised T-Mobile's price target to $46, while maintaining Dish's target at $94. Today: DISH +1.7% to $75.51; TMUS +2.3% to $40.24; VZ -1.8% to $47.25.
Wed, Jun. 3, 1:01 PM
- With an acquisition deal for Suddenlink in the rear-view mirror, France's Altice (OTC:ATCEY) might have its eye on a much bigger move into the U.S.: a purchase of Verizon's (NYSE:VZ) residential wireline business, including FiOS TV/Internet.
- That's according to Citigroup's Michael Rollins in his latest report. "While press reports suggests many in the market believe Cablevision is Altice's next acquisition, we believe an acquisition of Verizon's local wireline operation (excluding the enterprise and smaller strategic business units) is more likely," Rollins writes.
- Verizon sold local wireline operations in three states to Frontier Communications earlier this year. Verizon's remaining assets in that business could bring $34B, Rollins estimates.
- Altice, owner of Numericable and SFR in France, has aimed to merge those TV and wireless firms with Bouygues Telecom (OTCPK:BOUYY), to bring France's wireless market down to three major firms, but Bouygues has said nothing's in the pipeline.
- "A sale of Verizon's remaining (local) operations could accelerate the reduction in financial leverage without meaningful dilution to free cash flow per share," Rollins says. "Such a move would also increase flexibility for Verizon to more aggressively pursue spectrum purchases and further scale for its emerging wireless, over-the-top video strategy."
Tue, Jun. 2, 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%.
Tue, May 26, 3:39 PM
- After Verizon (NYSE:VZ) went to AOL to talk deal last year -- talks that were ultimately successful in a $4.4B merger agreement -- it was approached by three other (unnamed) firms regarding an acquisition, newly filed documents show.
- Verizon had been thinking about a joint venture in order to get its hand on ad tech for its mobile video plans before going for the whole acquisition, the filings show.
- Along the way AOL had thought about selling off "brand assets" (Huffington Post, TechCrunch), and the fate of those sites is still an open question.
- AOL chief Tim Armstrong got a special Founders' Incentive Award of 1.5% of company market value at the time of the deal's completion (at a current $3.9B, a bonus of about $59M) -- though he holds options and shares that would bring him $179M and up.
- 14D-9 filing
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Verizon Communications Incis a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its two segments are Wireless and Wireline.
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