AT&T Still Craves Spectrum Deals
In December, AT&T (NYSE:T) ended its $39 billion effort to purchase T-Mobile USA due to strong opposition from the Federal Communications Commission and the Department of Justice. The deal would have made the combined company the largest wireless provider. However, since the deal fell through, AT&T is considering other deals to expand its wireless capacity.
The plan to purchase T-Mobile was an effort to expand AT&T’s cellular airwaves or spectrum, in order to relieve a congested network and increase service speeds for devices such as the Apple Inc. (NASDAQ:AAPL) iPhone. According to the Wall Street Journal, AT&T is reportedly considering new deals with companies such as MetroPCS Communications Inc. (NYSE:PCS), Leap Wireless International (NASDAQ:LEAP) and DISH Network (NASDAQ:DISH). The WSJ explains, “At stake for AT&T and other carriers is a limited supply of wireless spectrum licenses that are key to building out their networks, as smartphones and tablets drive a sharp increase in mobile data use. Congress has complicated matters with halting progress toward putting more wireless licenses up for auction.”
Investor Insight: Yahoo’s Failed Deal With Alibaba: What Went Wrong?
Acquiring wireless carriers such as MetroPCS or Leap would help AT&T improve its capacity. MetroPCS is the country’s fifth-largest cellphone operator, while Leap is the sixth-largest. A deal with Leap appears more likely, as MetroPCS openly opposed the AT&T and T-Mobile deal. The market also appears to be more confident in a deal with Leap, as shares of the company surged more than 8 percent on Thursday. Meanwhile, shares of MetroPCS gained about 2.6 percent. According to people familiar with the matter, AT&T and Leap are engaged in talks that could provide AT&T access to spectrum in dozens of markets. Analysts at J.P. Morgan Chase & Co. place a value of $2.1 billion on these markets.
As wireless devices such as smartphones and tablets become more popular, wireless carriers will continue to explore ways to expand networks. Verizon Wireless (NYSE:VZ) recently announced it would pay $3.6 billion to purchase a large amount of unused airwaves in the U.S. from numerous cable companies. However, Verizon is still waiting on approval from the FCC to complete the deal.
To contact the reporter on this story: Eric McWhinnie at email@example.com
To contact the editor responsible for this story: Damien Hoffman at firstname.lastname@example.org