An Uncertain 2017 for the Wireless Industry

SHARE THIS ARTICLE

Share on facebook
Share on google
Share on twitter
Share on linkedin

By Austin McLendon, Marketing Manager at Tower Point Capital
screen-shot-2017-01-04-at-7-56-08-pmA merger could be within reach under a Trump Presidency putting some cell site locations at risk for consolidation.

Since President-elect Donald J. Trump won the general election in November, talks and speculation of a possible merger has spread across the telecommunication industry. Stock prices of Sprint and T-Mobile have increased and tower companies’ stocks, such as SBA and American Tower, have decreased. With a Republican in The White House, most expect a Trump administration to be more lenient and laissez-faire in regards to the oversight of mergers and acquisitions.  With the market movement and a merger-friendly administration, 2017 is expected to be a year of change and uncertainty according to many wireless industry analysts.

In 2012, AT&T attempted to takeover T-Mobile, and in 2014, Sprint placed a $32 billion bid for T-Mobile. Both merger attempts were unsuccessful due to its unpopularity with the Democratic-led FCC under President Obama. Sprint’s parent company, SoftBank, was quoted in August of this year saying they are still interested in merging. On December 6, after meeting with President-elect Trump, the SoftBank CEO announced his plans to invest $50 billion in the U.S. As a result, Sprint and T-Mobile’s stocks increased again.

Due to the election, market movements, and recent announcements, wireless industry experts are giving their predictions of what could happen in the New Year. T-Mobile CFO, Braxton Carter, said “It’s hard to imagine there’s not going to be more openness to consolidation.” In regard to SoftBank’s announcement of investing $50 billion in the U.S., a Bellevue-based wireless industry analyst, Chetan Sharma, said “It’s a smart move on SoftBank’s behalf. Opening up dialogue this early in Trump’s administration sets SoftBank up for its next M&A move.” Sharma further predicted that Softbank will renew a proposal to acquire T-Mobile in a matter of weeks, not months.

A merger between Sprint and T-Mobile will shake the entire industry. Change will be felt from the consumers to the tower companies. Substantial decommissioning is a common theme after a telecom merger occurs. In 2013, when T-Mobile acquired Metro PCS, T-Mobile decommissioned 10,000 of 12,500 Metro PCS sites due to redundant cell coverage. Similar consolidation occurred during the mergers of Sprint and Nextel, Verizon and Alltel, and AT&T and Cingular. According to the Managing Director of TowerPoint Capital, “We are experiencing all the historic signs of a near term merger or acquisition. The stock price of the carriers that are being targeted are up and the stock prices of the tower companies are down.” In addition to a Republican administration, starting a telecom merger could be within reach in the near future.

January 5, 2017

Reader Interactions

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.