Verizon Communications
' (
VZ
) proposed $3.9 billion purchase of wireless spectrums is facing a
major setback.
T-Mobile, a unit of Deutsche Telekom, is urging Federal
Communications Commission (FCC) to block the deal citing unfair
competition. T-Mobile as a strong foe stated that the purchase
would lead to concentration of excess spectrums in the hands of
Verizon, which is already the largest U.S. mobile service provider
with the maximum number of licenses. The deal would also allow the
cross selling of each other's products and services, and raise
concerns among some politicians and consumer advocacy groups.
In December last year, Verizon proposed to buy wireless spectrum
from a group of cable companies, including
Comcast
(
CMCSA
),
Time Warner Cable
(
TWC
) and Bright House Networks for $3.6 billion, and radio-spectrum
licenses from the privately held cable operator Cox Communications
Inc. for $315 million.
The low-cost wireless carrier
MetroPCS Communications Inc.
(
PCS
) and ten public interest groups have also joined the conflict. The
third-largest U.S. wireless carrier
Sprint Nextel Corp.
(
S
) did not oppose to the deal directly but asked for a careful
evaluation and its overall impact.
The move comes two months after T-Mobile failed to sell itself
to the second-largest U.S. wireless operator,
AT&T Inc.
(
T
), amid opposition from the FCC and Justice Department.
On the other hand, Verizon is defending its rival's antagonism
by saying that the spectrums are presently idle and will become
useful when made available to customers. Verizon wants to acquire
these spectrums in order to support its video content and other
data services in the rapidly growing smartphone market, thereby
enhancing the download speeds.
We are maintaining our long-term Neutral recommendation on the
stock. Currently, the stock retains the Zacks #3 Rank (Hold) for
the short term (1-3 months).
COMCAST CORP A (
CMCSA
): Free Stock Analysis Report
METROPCS COMMUN (
PCS
): Free Stock Analysis Report
SPRINT NEXTEL (
S
): Free Stock Analysis Report
AT&T INC (
T
): Free Stock Analysis Report
TIME WARNER CAB (
TWC
): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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