How AT&T’s Big Move Affects the Rest of the Gang

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Sunday was a big day for AT&T, as you may have heard. The boards of AT&T and DirecTV met on Sunday to approve a merger of the two companies, The Wall Street Journal reported. AT&T will acquire DirecTV for $49 billion. What does this mean for the other major players in the wireless industry? Jennifer Fritzsche, Senior Analyst at Wells Fargo, “In terms of VZ, we would be surprised if this deal forces it to make a reactionary transaction. In our view, the No. 1 focus for VZ continues to be on AWS-3 auction (but DISH’s [followed by M. Ryvicker] spectrum would be of interest, as well, in our view). For S and TMUS, we actually believe this news helps (not hurts) their cause for a potential merger. While we recognize that the T/DTV merger is a vertical deal and does not take out a competitor, we think the size of the resulting company very much shines the light on the lack of scale Sprint and TMUS would have in this changing world where enabling OTT [over-the-top], content relationships and wireless scales are hugely important.” This deal has posed a lot of questions, such as, “how does this help wireless?” When you think of AT&T, you think of their wireless footprint, so how does this deal help them in that area? Because DirecTV has no spectrum, Fritzsche believes that this convergence has a lot to do with the future of TV and wireless. “While cable has talked much about the desire to get into wireless through its WiFi initiative, the wireless incumbents have a clear time to market advantage today. We also asked T about DISH, as with strong content relationships and low band and high band (2.0GHz) spectrum to boot, DISH seemingly checks more boxes for AT&T than DTV. T made the valid point, that an acquisition of DISH likely would have sounded more regulatory alarms–especially ahead of the all-important spectrum auctions (AWS-3 and incentive auction),” Fritzsche explained.

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