Verizon Wireless (NYSE:
) has been fighting an uphill battle when it comes to purchasing
spectrum from companies slated to become competitors. Now,
has claimed that the famous mobile device retailer will have to
bend over backwards to finalize deals with the likes of Comcast
) and Time Warner Cable (NYSE:
While current cable providers could certainly pose an
insurmountable obstacle to overcome, it is not the case with
Verizon's struggle. In fact, the Department of Justice (DOJ) and
Federal Communications Commission (FCC) are said to be readying an
approval for the company's proposal.
So who is left to stand in the way? According to Reuters,
antitrust regulators have sought to place strict limits on
controversial side deals as the additional spectrum would offer
Verizon a leading advantage among competitors.
Monopolizing the wireless and cable industries has also become a
slight concern as Verizon and Comcast dominate each, respectively.
While new and improved technology would likely come from joint
ventures between the two, antitrust regulators do not look fondly
upon cross-marketing and promotion between the two giants.
Currently, Verizon is said to be offering $3.9 billion to
assorted cable providers for a healthy piece of the spectrum pie.
The company hopes to finalize negotiations in August, which Reuters
sources believe is doable.
The deal's potential close comes at a time when Verizon
maintained its ongoing reign and reported solid second quarter
results. This has been a pattern for Verizon, with revenues rising
four percent (or $1 billion) when wireline decline could have
greatly impacted results. Gross margins also jumped from 60 percent
to 62 percent.
With recent acquisitions such as that of Hughes Telematics and
breaking into the cable television business, Verizon is making big
moves throughout 2012. However, not everyone looks upon the strides
favorably, as concerns regarding the company's new cable venture
required "strong measures".
The possible solutions are "strong measures that indicate DOJ
had significant concerns about the anticompetitive potential of key
features of the proposed agreement," an off-the-record antitrust
expert told Reuters.
Regardless of raised eyebrows and ongoing negotiations, it
appears that Verizon will inevitably close a spectrum cable deal
soon, joining others such as Apple (NASDAQ:
) and Google (NASDAQ:
), who are rumored to be jumping on the
Verizon closed Thursday at $44.62, up about 11.22 percent
(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
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