The past week saw quite a few developments in the telecom
sector. The FCC finally approved Verizon's (
VZ
) plans to purchase AWS spectrum from cable companies, just a week
after the deal had received antitrust approval from the Justice
Department. With Verizon bolstering its LTE expansion plans with
the spectrum purchase, we feel AT&T (
T
) might consider partnering with Dish Network (
DISH
) in the satellite-TV service provider's wireless venture.
Meanwhile, China's largest wireless carrier, China Mobile (
CHL
), reported a sharp slowdown in 3G growth in July even as its
closest rival, China Unicom (
CHU
), continued its strong 3G performance with about 60% more 3G net
adds during the same period.
See our complete analysis for Verizon
| AT&T |
China Mobile here
Verizon receives approval for cable deals
Verizon has finally received the green light from the
FCC for its $3.9 billion purchase of nationwide wireless
spectrum from a consortium of cable companies that includes
Comcast(CMCSA), Time Warner Cable (TWC), Bright House Networks
and Cox. The carrier will, however, have to divest some of the AWS
spectrum it acquires to T-Mobile within 45 days of closing the
cable spectrum deal. The FCC has also imposed additional conditions
that will ensure that Verizon doesn't hoard spectrum and continues
to offer data roaming arrangements on the acquired spectrum to
other carriers at reasonable rates.
This comes on the heels of an antitrust approval it won last
week from the Justice Department, which had sought to apply
several conditions to the cross-marketing deals that the carrier
and the cable companies signed together. The DoJ felt that the
unaltered agreement would have hurt consumers by reducing
competition and increasing prices. (see
Verizon Likely To Receive FCC Approval For Cable
Deals Soon
)
Overall, Verizon's spectrum deal is a positive for the industry,
since it brings unused spectrum back to the wireless industry at a
time when demand for data services is soaring and the industry is
trying to avoid a spectrum crunch. Verizon's divestiture of some of
the acquired spectrum, as well as the sale of the lower blocks of
700MHz spectrum, will help reallocate spectrum among carriers in a
way that meets specific carrier needs. Not only will
this help carriers build out robust LTE networks but also
improve speeds and prevent network clogging.
AT&T-Dish partnership?
Now that Verizon has secured spectrum for its LTE
plans, AT&T will be aggressively looking for ways to
bolster its own spectrum resources. After recent deals with
Nextwave Wireless, Comcast and Horizon Wi-Com, we believe
AT&T could look to partner with Dish in its maiden
wireless bid.
Last year, AT&T went after T-Mobile for its spectrum but,
ironically, ended up parting with some of its own spectrum as part
of a break-up fee after the proposed merger failed to pass
regulatory muster. Trying to acquire T-Mobile was probably an
ill-advised move considering the anti-competitive concerns it
raised in an industry that already had smaller players finding it
hard to compete in a near-duopolistic environment. Having learned
from that fiasco, however, AT&T can look to make a bid for
some of the smaller wireless players. But having had a
very public run-in with regulatory bodies recently, AT&T will
probably find it prudent to avoid the M&A scene in the
near-term. In such a scenario, Dish's spectrum could be a
potential near-term solution for AT&T. (see Verizon's Cable
Spectrum Deal May Cause AT&T To Partner With Dish)
China Mobile's 3G slowdown
China Mobile reported its slowest growth in 3G additions in
19 months as only about 1.9 million subscribers opted to join the
company's 3G network in July, a sharp fall from over 2.8 million in
3G net adds posted in June. This is in stark contrast to
competitor China Unicom, which continued its impressive
3G showing by adding about 3.1 million 3G subscribers in July, the
most any carrier has had this year. For the first half of
2012, China Unicom led the 3G charts with about 17.5 million 3G net
adds compared to China Mobile's less than 16 million for the same
period. Despite an overwhelmingly large subscriber base of
close to 670 million, China Mobile is falling behind in the 3G race
as smaller rivals such as China Unicom are getting aggressive with
their 3G plans. (see China Mobile Needs To Step Up As 3G Growth
Slows)
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