Sprint Stopping T-Mobile Pursuit May Help Other MergersTodd Shields
The end of Sprint Corp.’s campaign to buy T-Mobile US Inc. is seen as auguring well for acquisitions by Comcast Corp. and AT&T Inc. as it gives regulators the cover to allow consolidation in other areas of telecommunications.
Regulators’ successful defense of maintaining a wireless-service market with four major carriers “provides some new political breathing room” for the Federal Communications Commission and Justice Department, Paul Gallant, a Washington-based analyst at Guggenheim Securities LLC, said in a note. It’s a “mild plus” for Comcast’s pending takeover of Time Warner Cable Inc. and AT&T’s proposal to buy DirecTV, he said.
The demise of Sprint’s T-Mobile campaign removes a distraction for regulators, Paul de Sa, a senior analyst at Sanford C. Bernstein & Co. in New York, said in a note today.
“The commission can take a victory lap for having been the cop on the beat in blocking at least one megadeal out of an unprecedented, and unpopular, media/telecom consolidation wave,” Craig Moffett, an analyst at MoffettNathanson in New York, wrote in a note to clients.
Sprint is said to have ended talks yesterday to acquire T-Mobile US as the potential benefits of combining the third- and fourth-largest U.S. wireless carries ran headlong into repeated warnings by regulators that they prefer a market with four nationwide players instead of three.
“Four national wireless providers is good for American consumers,” FCC Chairman Tom Wheeler said in an e-mailed statement today. “Sprint now has an opportunity to focus their efforts on robust competition.”
Today is the 27th day of a projected 180-day review at the FCC of Comcast’s $45.2 billion proposal to buy Time Warner Cable, which would combine the two largest U.S. cable companies. The agency has yet to set a schedule for receiving comments on AT&T’s $48.5 billion bid for DirecTV, the largest U.S. satellite-TV provider.
“There is still non-trivial uncertainty for both mergers,” with much of the review process yet to unfold, Gallant said.
Both transactions are expected to receive approval and be completed in the first half of next year, de Sa said.
A change from a Democratic U.S. president to a Republican administration following the 2016 elections would improve regulatory prospects for a renewed effort by Sprint to buy T-Mobile, Gallant said.