After many twists and turns in the last eight months, Verizon
Wireless' proposed purchase of wireless spectrum finally seems to
be reaching its last chapter, with a successful ending. Verizon
Wireless is a joint venture between
Verizon Communications Inc.
Vodafone Group Plc
The Department of Justice (DOJ) finally approved Verizon's $3.9
billion airwaves buyout deal with two cable companies - Cox
Communications and SpectrumCo. Notably, SpectrumCo is a group of
cable companies including
Time Warner Cable
) and Bright House Networks. The regulators have nevertheless put
certain conditions to control unfair competition and higher prices
The agency said the U.S. wireless leader would not be able to sell
products and services of cable operators in the area where it sells
its own products. Verizon already offers FiOS television and
Internet services to its consumers, giving strong competition to
In addition, the DOJ has reduced the span of the agreement to five
years (ending in December 2016) and any extension would again
require a new approval from the regulators. Further, Verizon
Wireless will have to proceed with its plans to swap radio spectrum
with the fifth largest wireless service provider T-Mobile USA, a
The transaction is still pending clearance from the Federal
Communications Commission, which is expected to be received
In brief, the approval allows Verizon to continue offering bundled
services that include DSL, wireless and satellite TV; and enables
cable operators to sell wireless services from Verizon's
competitors after five years and resell Verizon wireless services
using their own brands.
We are maintaining our long-term Neutral recommendation on Verizon.
Currently, the stock retains the Zacks #3 (Hold) Rank for the short
term (1-3 months).
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