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News
Issue #2002 - 16
(April 2002)
(Updated Apr.
24, 2002)
ACQUISITIONS,
MERGERS & AGREEMENTS
Merger Rumors Flourish
Merger rumors flourished in
the U.S. wireless telecom industry last week, even as analysts said
the current regulatory landscape would impede any imminent
consolidation deals.
According to reports from Bloomberg and Reuters, AT&T
Wireless has been in merger talks with Cingular Wireless; Reuters
also pegged Verizon Wireless and Sprint PCS as merger candidates.
Many industry observers argue that consolation is key to
restoring the wireless industry in the U.S. With slowing
subscriber-growth rates and price wars that only hurt profit
margins, analysts doubt the industry can continue to support six
national carriers.
Besides boosting spectrum capabilities of a few carriers,
consolidation would substantially reduce costs by eliminating
overlapping sales and marketing functions.
Prudential Securities analyst Chris Larsen told Bloomberg that,
together, AT&T Wireless and Cingular would be able to save money
by purchasing equipment in larger quantities as well as spend less
on marketing and promotion, by pursuing one brand instead of two.
But what stands in the way? The primary hurdle is the FCC’s
restrictions on how much spectrum mobile carriers can hold in a
single urban market. Even though the Commission voted late last year
to gradually relax, and then eliminate, restrictions, antitrust
officials are likely to come down hard on any big deals, Reuters
reported.
"Ultimately, consolidation is what many investors hope for,
but for now we can only watch and wait," Morgan Stanley analyst
Simon Flannery said in a recent research report.
(Bloomberg and Reuters)
MobileInfo.com’s Comments & Advisory: We have
two thoughts on this from customer and industry perspective, not
necessarily from investors' self-interest perspective. First that we
do need to have several large players in this market. We do not need
monopolies in this market - we like the automotive type of industry
market model to pervade wireless data service market. Apart from
market share consolidation which is advantageous to the merged
company, there is very little that customers may gain. Secondly, we
hope that service providers can cobble together inter-vendor roaming
arrangements to service national customers for virtual national
coverage in North America that includes Canada and Mexico (NAFTA
trading partners).
Note: This news release may contain
forward-looking statements. Readers should take appropriate caution in
developing plans utilizing these products, services and technology
architectures. All trademarks used in this summary are
the property of their respective owners.
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