Dobson Communications

Sprint/Clearwire to AT&T: public in favor of JV

Sue Marek — Tue, 05 Aug 2008 11:44:58 -0400

Sprint and Clearwire wasted no time responding to AT&T's request to deny the planned joint venture between the two companies. Last week, AT&T said that the Sprint/Clearwire venture would eventually use spectrum leased from schools, cities and non-profits and that the planned venture hadn't fully accounted for that spectrum in its proposed merger. AT&T said that when it purchased Dobson Communications last year the FCC took into account all the spectrum that AT&T hadn't accessed yet.

In its response, Sprint and Clearwire said that nearly 100 parties including educational and religious institutions, have filed comments urging the FCC to approve this transaction. The companies said that this proves that the public interest weighs in favor of this merger. In addition, because the 2.5 MHz spectrum has historically been under-utilized, many commentators are in favor of using this spectrum. They believe that the merger will lower costs for consumers by providing new products and services based upon WiMAX.

Sprint and Clearwire also said that they thought it was ironic that AT&T, the largest telecom company in the world, wants to invoke in applicable regulatory restraints that would stifle and delay Clearwire.

For more:
- see this Sprint/Clearwire FCC filing

Related articles:
AT&T asks FCC to deny Sprint-Clearwire merger
Sprint affiliate battles Clearwire JV

FTC approves AT&T-Verizon Wireless asset swap

Fri, 28 Mar 2008 07:59:58 -0400

The Federal Trade Commission approved an impending swap of wireless assets between Verizon Wireless and AT&T. The agency gave the carriers early termination of the waiting period required under the Hart-Scott-Rodino antitrust law. The swap sees AT&T acquiring some of Rural Cellular's properties, licenses, network assets and subscribers in New York, Vermont and Washington. Verizon Wireless recently acquired Rural Cellular. As part of the deal, AT&T is also set to snap up a Kentucky cellular license from Verizon. Likewise, Verizon Wireless will acquire some former Dobson Communications properties in Kentucky. AT&T recently acquired Dobson.

For more on the asset swap:
- read this blurb in the WSJ (sub. req.)

Small operator extinction

Fri, 21 Dec 2007 06:59:54 -0500

Over the past year we saw many operators snatch up smaller players in an effort to increase their footprint and continue their strong subscriber growth. It's clearly more economical for large operators to deploy new technologies in rural markets than for small operators with tiny footprints and less buying power.

Some purchases were quite small such as Leap buying Hargray Wireless for $30 million, Verizon Wireless snapping up Ramcell for an undisclosed amount and AT&T purchasing its remaining stake in Edge Wireless, a long-time affiliate in the Pacific Northwest. Others were more substantial such as AT&T acquiring Dobson Communications for $2.8 billion, Verizon buying Rural Cellular Corp. for $2.67 billion and T-Mobile USA snapping up SunCom Wireless for $2.4 billion.

For vendors the shrinking base of Tier 2 and Tier 3 carriers means fewer customers to buy their equipment. Obviously if you're a vendor with a Tier 1 customer base, this isn't a problem. But for smaller vendors, the Tier 3 carriers often offered them a chance to get a foothold in the market. -Sue

Small operator death knell

Fri, 14 Dec 2007 06:59:59 -0500

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Small operator death knellÃ‚Â
Over the past few months we've seen a flurry of operator acquisitions. Some were quite small such as Leap buying Hargray Wireless for $30 million and Verizon Wireless snapping up Ramcell for an undisclosed amount. Others were more substantial such as AT&T acquiring Dobson Communications for $2.8 billion, Verizon buying Rural Cellular Corp. for $2.67 billion and T-Mobile USA snapping up SunCom Wireless for $2.4 billion.Ã‚Â

Just last week AT&T purchased the remaining stake in Edge Wireless, a long-time AT&T affiliate with about 172,000 subscribers in several markets in the Pacific Northwest. The amount of the acquisition wasn't disclosed yet. The deal is expected to close in 2008.

It's clear that building a bigger footprint is the basis for this buying spree among the large operators. As penetration rates climb, operators have to expand their footprint into rural and suburban markets to maintain their growth.

These acquisitions also eliminate roaming fees and reduce operating costs. It's more economical for a large operator to deploy new technologies in rural markets than for small operators with tiny footprints and less buying power. It's also tough for small operators to get the latest handsets from the manufacturers. Small operators don't have the buying power or the volume to cut exclusive deals with handset makers so they are often left with last-year's handset models.

Nevertheless I'm saddened by this trend. Many small operators are more entrepreneurial and innovative than their larger counterparts. For example, Kentucky-based Bluegrass Cellular offered push-to-talk and multimedia messaging before many of its larger counterparts. Midwest Wireless (before it was acquired by Alltel) experimented with a fixed wireless offering that competed with DSL and cable-modem service providers. Others, such as Cellular South differentiate themselves from their Tier 1 competitors by offering stellar customer service and strong ties to the community.

For vendors this trend means fewer customers to buy their equipment. Obviously if you're a vendor with a Tier 1 customer base, this isn't a problem. But for smaller vendors the Tier 3 carriers offer them a chance to get a foothold in the market.

I hope some small operators are able to survive this acquisition trend. Without them, I think this market is much less dynamic. -Sue

AT&T: wireless rev to grow in mid-teens in 2008

Wed, 12 Dec 2007 06:59:58 -0500

AT&T Mobility announced that it expects revenue to increase by a mid-teen percentage in 2008 thanks in part to the recent acquisition of Dobson Communications. The carrier said savings from merger synergies and other items will increase by $2 billion next year. The company's growth in wireless is fueled by broadband upgrades to its network and its exclusive deal with Apple for the iPhone (consumers can buy up to five iPhones at a time now). On the analyst call to discuss AT&T's projected growth for next year, AT&T Mobility president and CEO Ralph de la Vega repeated his claims that AT&T's network is already "open" because the carrier's GSM networking technology allows users to swap SIMs into different phones, allowing for greater device portability. That doesn't apply to the iPhone, though.

For more on AT&T's forecast:
- read this write-up from the Motley Fool

AT&T and Verizon Wireless swap assets, spectrum

Tue, 04 Dec 2007 06:59:57 -0500

AT&T has inked a deal with Verizon Wireless to trade licenses, network assets and subscribers from the two companies'' recent rural carrier acquisitions. AT&T will acquire some of those assets from Verizon Wireless once the company completes its acquisition of Rural Cellular. In turn, Verizon Wireless will acquire some of those assets from AT&T's acquisition of Dobson Communications. Verizon Wireless will also get 10 megahertz of PCS spectrum from AT&T and some cash.

Separately, AT&T has agreed to sell the Cellular One brand to Trilogy Partners.

For more on the deal:
- read this article from Thompson

ALSO: AT&T acquires Edge Wireless. Article

AT&T completes Dobson acquisition

Fri, 16 Nov 2007 06:59:54 -0500

AT&T said it has completed its $2.8 billion acquisition of Dobson Communications, which it first announced in July. AT&T has said it expects to save about $2.5 billion through overhead cuts and reduced roaming expenses. Dobson sold wireless services under its Cellular One brand, which boasted about 1.7 million customers. About 22 percent of the carrier's revenue comes from roaming agreements with AT&T and T-Mobile USA.

The Dobson acquisition extends AT&T's coverage and services into a number of primarily rural and suburban areas in Alaska, Arizona, Illinois, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, New York, Ohio, Oklahoma, Pennsylvania, Texas, Virginia, West Virginia and Wisconsin.

For more on the Dobson-AT&T deal:
- read this press release

Dobson exceeds expectations in Q2

Fri, 10 Aug 2007 06:59:54 -0400

Rural carrier Dobson Communications posted a better-than-expected Q2 profit, thanks to strong service revenue growth. AT&T recently announced it would acquire Dobson in a deal worth $5.1 billion. The rural's net income for the quarter was $16.1 million, up from a loss of $8.4 million during the same quarter last year. Revenue was $360.2 million, up 15 percent from $312.1 million in Q2 2006. Analysts were expecting revenue of $345.4 million, according to Thomson Financial.

The carrier said results for the first two quarters exceeded original targets, but the company has suspended guidance since its acquisition by AT&T is pending.

For more on Dobson's quarter:
- read this press release

U.S. Cellular customer base tops 6 million

Tue, 07 Aug 2007 06:59:55 -0400

Tier 2 carrier U.S. Cellular continues to thrive. In second quarter, the carrier's subscriber base topped 6 million, up 5.4 percent year over year and posted revenues of $978.6 million, up 14.8 percent.

The operator, which is known for its superior customer service and low churn, had a postpay churn rate of 1.4 percent and an average revenue per user of $50.42.

Like many Tier 2 carriers, data services are finally starting to impact the bottom line. U.S. Cellular reported second quarter data revenue of $85.4 million, which is 9.4 percent of service revenues.

U.S. Cellular is one of the few remaining standalone Tier 2 carriers. Dobson Communications was snatched up by AT&T July 2 for $5.1 billion and Verizon Wireless announced July 30 that it was purchasing Rural Cellular Corp. for $2.8 billion.

For more on U.S. Cellular's second-quarter earnings:
- see this release

Related articles:
Verizon Wireless income up, buys RCC. Article
AT&T buys Dobson in a deal worth $5.1B. Article

Verizon Wireless income up, buys RCC

Mon, 30 Jul 2007 06:59:58 -0400

Verizon Wireless added 1.3 million net new subscribers during its second quarter, just shy of the 1.5 million net subs AT&T added. Verizon Wireless ended the quarter with 62 million subscribers, up from 54.8 million a year earlier and second only to AT&T's 63.7 million subs. Verizon Wireless' revenue, however, topped AT&T at $10.8 billion, compared to $10.4 billion for AT&T. VZW also beat AT&T when it came to churn: VZW's 1.08 percent churn rate is much lower than AT&T's 1.6 percent. The carrier's ARPU rose 3 percent to $51.84.

Verizon also announced that it would acquire Rural Cellular (RCC)Ã‚Â for $2.67 billion, a move that echoes AT&T's recent acquisition of Dobson Communications for $2.8 billion. RCC operates in the 850 MHz band and has been looking to sell its assets by this weekend, according to Verizon CEO Ivan Seidenberg. Seidenberg said Verizon has been tracking the company for some time and believes the deal will make for aÃ‚Â "meaningful expansion of our footprint as well as improve service for existing Verizon customers." Seidenberg also predicted that the deal will save the company more than $1 billion in synergies in reduced roaming and OPEX expenses. RCC's customer base is 716,000 and it operates in about 15 states.

Seidenberg noted that RCC "operates both GSM and CDMA networks. Our plan would be--just to make sure there is clarity about it--to build an overlay CDMA network to convert their existing customers to CDMA, but we will continue to operate the GSM network to service the needs of the GSM operators that roam on that network."

For more on the carrier's announcements:
- read this press release on its Q2
- and read this release about the RCC deal

AT&T nets 1.5M subscribers in Q2

Tue, 24 Jul 2007 06:59:58 -0400

AT&T's wireless unit has posted its second quarter results, which include a net gain of 1.5 million wireless subscribers (partially thanks to the iPhone)Ã‚Â to reach 63.7 million. "Mobility is a major growth engine for AT&T," AT&T CEO Randall Stephenson said. "Our launch with Apple of the breakthrough iPhone has quickly redefined customer expectations for their wireless experience, initial response was unprecedented, and sales in July continue to be strong. On June 29, we also announced an agreement to acquire Dobson Communications, which will further expand our wireless coverage in key rural and suburban areas." Here are some other key metrics from the quarter:

The June 29 iPhone launch allowed for less than two days of sales and activations before the end of the quarter, but AT&T activated 146,000 iPhone subscribers during those two days.
Total service ARPU in the second quarter was $50.63, up 3.6 percent.
Total churn, including prepaid and reseller results, was 1.6 percent, down from 1.7 percent in the year-earlier quarter.

For more on AT&T's Q2:
- read this press release

AT&T buys Dobson in a deal worth $5.1B

Mon, 02 Jul 2007 06:59:58 -0400

Last month, private equity firms bought rural mobile carrier Alltel Wireless, now AT&T has scooped up Dobson Communications, which has a market cap of $1.73 billion and debt totaling $2.67 billion, for $2.8 billion. The price reflects an 11 percent premium over the carrier's share price, but if you include the carrier's net debt as of Q1, the total transaction value is about $5.1 billion. The rural carrier hired Morgan Stanley to explore its options. AT&T said it expects to save about $2.5 billion through overhead cuts and reduced roaming expenses.

Dobson sells wireless services under its Cellular One brand, which boasts about 1.7 million customers. About 22 percent of the carrier's revenue comes from roaming agreements with AT&T and T-Mobile USA. Dobson offers services in many Midwestern states, parts of the Southwest, Alaska and upstate New York. Dobson's top competitors include Alltel, Rural Cellular and US Cellular.

In 2001 the rural carrier hired Lehman Brothers and Bank of America to shop it around, but come November of that year the company decided not to opt for a change in control.

For more on AT&T's purchase of Dobson:
- read this article from the WSJÃ‚Â (sub. req.)