Deutsche Bank downgraded Sprint PCS (PCS) to sell from hold.
Analyst Viktor Schvets says the wireless industry is undeniably back on investors' radar screens, up by 56% since March 11, fed by a stream of positive news and expectations of record results in the second quarter. However, Schvets says the wireless industry faces an extremely challenging environment, including the introduction of number portability in November, which will allow people to keep the same phone numbers when changing wireless carriers. This should halt positive trends in churn and margins for at least three quarters, Schvets says.
With six national wireless players, and an abundance of of regional carriers, Schvets thinks the sector has a suboptimal structure that is not easily solved via consolidation, which should restrict expansion in margins.