Verizon Spectrum Buy Gets DOJ Nod - Analyst Blog

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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. ( VZ ) and Vodafone Group Plc ( VOD ).

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 Comcast Corp. ( CMCSA ), Time Warner Cable ( TWC ) and Bright House Networks. The regulators have nevertheless put certain conditions to control unfair competition and higher prices to consumers.

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 cable operator.

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 unit of Deutsche Telekom ( DTEGY ).

The transaction is still pending clearance from the Federal Communications Commission, which is expected to be received shortly.

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).


 
COMCAST CORP A (CMCSA): Free Stock Analysis Report
 
DEUTSCHE TELEKM (DTEGY): Free Stock Analysis Report
 
TIME WARNER CAB (TWC): Free Stock Analysis Report
 
VODAFONE GP PLC (VOD): Free Stock Analysis Report
 
VERIZON COMM (VZ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CMCSA , DTEGY , TWC , VOD , VZ

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