The Zacks Analyst Blog Highlights: Dish Network, Sprint Nextel, AT&T, Verizon
Communication and Rogers Communication
CHICAGO, April 19, 2013
CHICAGO, April 19, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Dish Network Corp. (Nasdaq:DISH),
Sprint Nextel Corp. (NYSE:S), AT&T Inc. (NYSE:T), Verizon Communication Inc.
(NYSE:VZ) and Rogers Communication Inc. (NYSE:RCI).
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Here are highlights from Thursday's Analyst Blog:
Moody's Places DISH Under Review
Credit rating agency, Moody's Investors Service has put the U.S. based
satellite service provider, Dish Network Corp. (Nasdaq:DISH) on review for a
possible downgrade. This decision by the agency is in response to DISH's
proposal to acquire Sprint Nextel Corp. (NYSE:S) , the third-largest wireless
carrier in the U.S., for $25.5 billion.
DISH has proposed to pay $7 per share, which includes $4.76 in cash and
0.05953 of DISH share for every Sprint share. This recent offer from DISH
counters Japanese telecom carrier, SoftBank Corp.'s bid to buy 70% of Sprint's
stake for a total consideration of $20.1 billion.
Currently, DISH Network holds a Ba2 corporate credit rating from Moody's,
which places the third-largest U.S. satellite provider into junk category.
Moody's has announced that it will evaluate the strategic synergies and the
related growth opportunities for DISH from the acquisition, before assigning
any outlook on the company.
The rating firm also said that it will scrutinize the financial risk of DISH
from the acquisition, which includes assessing the leverage and liquidity
position of the standalone company as well as that of the combined DISH-Sprint
entity. Shareholders reacted negatively as the stock fell 1.6% in the
aftermarket trade on Tuesday to close at $37.32.
If downgraded, this will be the second major setback for the company in quick
succession as recently Standard & Poor's Rating Services (S&P) lowered its
outlook on the company to Stable from Positive. The rating agency cited
growing leverage of DISH coupled with uncertainty related to its wireless
venture, as the primary reasons for this downgrade.
DISH Network argued that the proposed acquisition will allow it to provide
triple-play services by combining its satellite network with Sprint's wireless
network. Additionally, it will be able to counter stiff competition from
market leaders AT&T Inc. (NYSE:T) and Verizon Communication Inc. (NYSE:VZ) ,
which dominate nearly 35% of the U.S. market.
However, DISH already possesses a highly leveraged balance sheet and fiscal
2012 with an enormous $11.6 billion in long-term debt. Recently, DISH Network
raised $2.3 billion debt from the market.
The acquisition will further aggravate its debt position to $27.7 billion,
which will increase the financial risk for the company in terms of higher
interest payments and increased leverage. We believe that accessing the debt
market to fund the acquisition might worsen its leverage position further,
which in turn might affect its ratings.
Currently, DISH Network has a Zacks Rank #3 (Hold).
Rogers Buys BLACKIRON from Primus
Rogers Communication Inc. (NYSE:RCI), one of the leading telecom carriers of
Canada, has acquired BLACKIRON Data from Primus Telecommunications Group for a
cash consideration of $200 million. The acquisition will allow Rogers to
expand its reach within the enterprise segment spread across Canada.
BLACKIRON Data is an innovator in data centre and cloud computing services and
has approximately 4,000 customers. BLACKIRON offers a wide range of IT
infrastructure solutions including Customer Relationship Management (CRM) and
works closely with clients to deliver value to their business.
Acquisition of BLACKIRON will allow Rogers Business Solutions (RBS) to
strengthen its capacity and coverage across Canada as almost 80% of all
Canadian businesses are located within 200 km of a BLACKIRON Data centre.
Notably, BLACKIRON owns and operates 8 data centres across five important
cities of Canada and has recently opened a contemporary data centre in
Markham, Ontario. The data centre has expanded its current operations by 45%.
This strengthens RBS's position in Ontario, where it already owns two data
centres and has partnerships with multiple cloud vendors.
Combining Rogers' fibre-based network with BLACKIRON's advanced range of data
centres will allow the Canadian telecom company to become a turnkey IT
infrastructure solution provider for enterprise clients. BLACKIRON, which has
132 skilled professionals, reported an EBITDA margin of 38.6% on annual
revenue of $33.7 million at the end of 2012.
Companies providing cloud computing service continue to flourish as
virtualization has become essential for business enterprises to reduce costs
and for exploring the markets worldwide.
We believe that integrating BLACKIRON with RBS's network will facilitate the
latter to serve a wider customer base and strengthen its position in the
Canadian B2B (business to business) market.
Rogers currently carries a Zacks Rank #2 (Buy).
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