A Foolish Week of Telecom

The top telecom story of the week has to be the Federal Communication Commission's release of a redacted version of its preliminary report that could essentially send the AT&T (NYSE: T  ) / T-Mobile merger into oblivion.

The FCC report shoots down the benefit claims that AT&T says will occur from its proposal. Here are the essentials:

AT&T Claims

FCC Report

Would not be anti-competitive. "raises significant competitive concerns" and "material questions of fact."
Would lower wireless prices. "their claim that the proposed transaction would result in lower wireless industry prices is flawed ."
Would create synergies that would lower costs.  "[If synergies are realized] ... would likely result in reduced service quality."
Would create 96,000 new jobs. "We cannot find that the transaction would lead to a net increase in U.S.-based jobs."

AT&T took grave offense, saying the FCC "document lacks all credibility."

High noon at the Clearwire corral
Clearwire
's (Nasdaq: CLWR  ) game of brinksmanship paid off yesterday, as its alleged (and thinly veiled) ploy to pressure Sprint Nextel (NYSE: S  ) into extending their 4G networking partnership worked.

Two weeks ago, Clearwire's CEO, Erik Prusch, told The Wall Street Journal his company may miss paying a $237 million interest payment that was due on Dec. 1. Sprint had been stringing Clearwire along, not committing to the contract extension that Clearwire needed for its survival.

Well, Prusch's game of chicken worked: Sprint blinked and signed deals with Clearwire worth about $1.6 billion. Clearwire made the interest payment. Crisis averted ... for now.

A WIN WIN situation
Windstream
(Nasdaq: WIN  ) made it over the last of its hurdles and completed its purchase of the competitive local exchange carrier PAETEC. There was a bit of glitch in the deal going forward after the proposal was announced last summer. Some PAETEC shareholders contemplated suing the company's board of directors for accepting too low of a bid. A settlement was finally released in October, and the FCC gave its blessing on Tuesday.

This was the largest of Windstream's eight acquisitions since the company was formed in 2006.

Verizon's spectrum collection grows
And today, Verizon (NYSE: VZ  ) announced a deal to buy $3.6 billion worth of nationwide spectrum licenses from SpectrumCo. That company was formed as a joint venture between Comcast (Nasdaq: CMCSA  ) , Time Warner Cable (NYSE: TWC  ) , and Brighthouse Networks in order to -- as the name suggests -- invest in wireless spectrum.

The deal covers 122 licenses and 259 million potential customers. SpectrumCo paid $2.4 billion for the spectrum at a 2006 FCC auction.

Add any of these companies to your personalized version of the Fool's My Watchlist service:

Fool contributor Dan Radovsky owns shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1735541, ~/Articles/ArticleHandler.aspx, 8/22/2014 10:25:53 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement