morgan stanley

FCC to review wireless mergers by year-end

Sue Marek — Fri, 26 Sep 2008 11:16:46 -0400

FCC Chairman Kevin Martin said yesterday that the agency will try to finish its review of Verizon's pending acquisition of Alltel as well as Sprint Nextel's joint venture with Clearwire by year-end.

This is good news for all parties involved since they have been preparing for a year-end close and telling investors that things are on track. Just last month Clearwire CFO John Butler told investors that things were on track for a fourth-quarter close and that buildout of its first four mobile WiMAX markets was moving smoothly.

Meanwhile, Verizon reportedly is preparing for the finalization of the Alltel deal and has retained Morgan Stanley to sell the overlapping assets it will have in 85 cellular markets as a result of its proposed acquisition. Morgan Stanley has reportedly valued the assets, which are spread throughout the U.S., to be between $3 billion and $4 billion.

Related articles:
Clearwire says Sprint deal will close soon
Verizon hires Morgan Stanley to divest overlapping markets

Verizon hires Morgan Stanley to divest overlapping markets

Sue Marek — Tue, 26 Aug 2008 11:16:30 -0400

According to the Financial Times, Verizon Wireless has retained Morgan Stanley to sell the overlapping assets it will have in 85 cellular markets as a result of its proposed acquisition of Alltel Corp. Morgan Stanley has reportedly valued the assets, which are spread throughout the U.S., to be between $3 billion and $4 billion.

Potential buyers had to submit proposals indicating their interest in the assets by Aug. 22 and Morgan Stanley is now expected to circulate the confidential information. A source told the newspaper that groups of carriers and individual carriers are interested in the Verizon's assets but no one has offered a price yet.

For more:
- See this article

Related articles:
Verizon snaps up Alltel for $28.1B
Verizon Wireless willing to divest spectrum to merge with Alltel

AT&T: HSPA will provide 20 Mbps data speeds

Sue Marek — Wed, 14 May 2008 10:42:15 -0400

During a presentation this morning at Morgan Stanley's 13th Annual Communications Conference in Washington, D.C, AT&T Mobility CEO Ralph de la Vega said that he believes AT&T has a time-to-market advantage over WiMAX with its HSPA technology. De la Vega said that HSPA Release 7 will give the company 7 Mbps to 20 Mbps data speeds within the next two years and the company will only have to deploy a software upgrade. "When people talk about future technologies like WiMAX, they don't realize it doesn't do any good to just have it in the network. They have to have devices, coverage and the entire ecosystem," he said. "We have the best broadband network with the best throughput today. And it will get better in the short term." Of course, the company does plan to migrate to LTE technology in 2010, bringing data speeds of up to 100 Mbps.

De la Vega also touted the company's exclusive deal with RIM to distribute its new Blackberry Bold device, which he believes that along with the Apple iPhone and other advanced devices will help increase the number of postpaid subscribers using integrated devices on the AT&T network. Currently 16 percent of postpaid subscribers on AT&T have integrated devices but de la Vega said this figure will grow substantially in the year ahead. "We have seen that when you give integrated devices to customers, the ARPU is double what you get with an average phone," he said. "If you make the devices easier to use and more intuitive to the user, you will see the usage go up."

For more:
- see the replay of de la Vega's presentation here.

Related stories:
AT&T to launch 3G BlackBerry Bold. See this Blackberry Bold story
AT&T extends 3G deployments, backs LTE for 4G. See this AT&T LTE story

Sprint's troubles inspire rumor mill

Thu, 06 Mar 2008 06:59:58 -0500

Sprint's recent troubles have made plenty of investors and subscribers uneasy, which has led to a number of acquisition-related rumors and highly speculative analysis. Here are three:

Sprint to spin-off Nextel

According to a Seeking Alpha report, Sprint Nextel has hired Morgan Stanley to implement board director Ralph Whitworth's plan to spin-off Nextel. Rumor has it the spin-off will be announced within the next two to four weeks. Most of Sprint's trouble can be traced back to the Nextel acquisition in the first place.

T-Mobile may acquire Sprint

Merrill Lynch analysts told the Kansas City Star today that Deutsche Telekom, owner of T-Mobile USA, might be considering a takeover of Sprint in an attempt to prevent a price war between the mobile carriers. Sprint's low share price and the weakness of the U.S. dollar both favor the European company, but Merrill Lynch said it is not privy to any inside information--it's just speculating.

Should Verizon buy Sprint?

Last week the Wall Street Journal's deals blog considered whether Verizon should acquire Sprint. The post brings up Verizon's stellar decision not to make a bid for Sprint back in 2004.

What do you think? Do any of these ring true?

For more on the rumor mill's field day with Sprint:
- read this post about spinning off Nextel
- check out this article about T-Mobile's interest
- read this blog post from the WSJ about Verizon

Airvana IPO prices below expected range

Fri, 20 Jul 2007 06:59:55 -0400

Shares of network infrastructure provider Airvana began trading today, after its IPO priced at $7 a share, just below the expected $8 to $10 per share range. Airvana plans on using the proceeds to fund R&D and sales and marketing outside of the U.S. market by hiring more staff. The company has also indicated some of the proceeds will fund acquisitions. Airvana posted new losses of $18.8 million on sales of $269,000 during the quarter ending April 1. Nortel accounted for all of the company's billings. Following the IPO, Airvana expects to have 63.4 million shares outstanding. Underwriters Morgan Stanley, Lehman Brothers, Deutsche Bank and UBS have an option to buy up to 1.2 million additional share to cover over-allotments. Airvana will trade under the symbol "AIRV."

For more on Airvana's IPO:
- read this AP article

Airvana IPO to fetch $66.5M

Tue, 03 Jul 2007 06:59:58 -0400

Infrastructure company Airvana plans to raise $66.5 million from an initial public offering, according to a filing with the SEC. The company hopes to raise $8 to $10 per share for the 8.3 million shares it expects to offer. Airvana said it will use the money to mostly fund R&D, sales and marketing outside of the U.S. The company also noted that some of the money could be used for acquisitions. During the fiscal quarter that ended at the end of March, Airvana posted net losses of $18.8 million on sales of $269,000. Nortel accounted for 100 percent of Airvana's billings for the quarter.

Morgan Stanley, Lehman Brothers, Deutsche Bank Securities and UBS Securities are underwriting the offering, and Airvana has given them the option to buy as many as 1.2 million additional shares to cover any over allotments. Airvana plans to list its shares on the Nasdaq as "AIRV".

For more on the IPO:
- read this AP article

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.)

Rumor Mill: Palm will be sold by Thursday

Mon, 19 Mar 2007 20:01:34 -0400

Reports of an imminent acquisition of Palm are circulating once again as Unstrung.com continues to churn the rumor mill: Private equity firms Texas Pacific Group and Silver Lake Partners are potential buyers of the Treo maker, according to the report. Nokia and Motorola are also bidding for Palm, which positions either company squarely against RIM in the U.S. for the enterprise market. Palm is set to report its quarterly earnings on March 22, which the report claims is the same day Morgan Stanley wants to close the deal.

For more on the Palm sale:
- take a look at this article from Unstrung

Editor's Corner

Sun, 04 Mar 2007 19:01:39 -0500

There's a lot of hoopla surrounding the price of the iPhone and whether the $500/$600 price tag will have a major impact on the mobile-phone market. A couple of surveys have come out with some interesting and mixed conclusions about this very topic.

Online consumer research company Compete, which surveyed iPod shoppers in December and followed up with them after Apple's iPhone announcement to find out if their willingness to buy an iPhone, found the game changer to be between $200 and $300 (sub. req.). About 59 percent of those aware of the impending launch of the iPhone would switch carriers to buy the device if it was between $200 and $300. At more than $500, just 1 percent said they'd buy the device.

Another survey from Morgan Stanley found that more people are interested in purchasing an iPhone than the combined number of people who already own or are planning to purchase a similar high-end device. Nineteen percent of survey respondents either currently own or plan to purchase a high-end device in the next year, and that number compares with 23 percent of respondents who said they are either extremely or somewhat interested in purchasing an iPhone in the 12 months following its release.

AT&T CFO Rick Lindner, speaking at a conference in New York, said that the company's analysis shows that as much as 75 percent of U.S. iPhone buyers will be first-time customers. "The majority of those customers, two-thirds to three-fourths, will be coming from outside of our current wireless customer base and that's a good thing," he said.

iPhone certainly is a game-changer for the industry--especially as Apple broadens the iPhone portfolio like it has done with the iPod--but will it meet Apple's initial lofty projections of 10 million devices in 2008 at a $500 price point? John Jackson, vice president with m:metrics, notes that there is no historical precedent for a device this expensive moving in significant volumes. The RAZR was once at that price point but didn't hit meaningful volume inflection points until it was subsidized and globally distributed, he notes. Motorola sold 12 million RAZR phones in 2006. Apple didn't sell 10 million or more iPods in a year until 2005, four years after its introduction. Of course now it has an iconic following.

Apple COO Timothy Cook thinks a "whole bunch" of people are going to pay that much for the iPhone because it has tremendous value, ie the touchscreen and rich browsing experience that no one else is offering. He also took the time to bash the handsets that are out in the market. "A lot of people pay zero for their cell phone. Guess why? That's what it's worth," he said at a recent conference. Actually consumers paid about an average of $63 for a new mobile phone throughout last year, excluding December, according to research firm NPD Group. They paid more for smart phones, but only about $200.

Could Apple be the one to get customers out of the subsidy mindset? Maybe if we could actually touch and use the iPhone, we'd all understand. At least by announcing it six months in advance, potential customers have time to save up. -Lynnette

Apple says other phones are "worthless"

Thu, 01 Mar 2007 19:01:35 -0500

Apple's COO Timothy Cook poured a little more salt in the wounds of handset makers tired of hearing about the iPhone: Cook told attendees at a recent Las Vegas conference: "A lot of people pay zero for their cell phone. Guess why? That's what it's worth." Dem's fightin' words. Cook went on: "If we offer something that has tremendous value, that is sort of this thing people didn't have in their consciousness--it was not imaginable--then I think there's a whole bunch of people that will pay $499, $599." Cook is, of course, referencing the company's iPod product there.

Morgan Stanley analyst Kathrynn Huberty believes that Wall Street is underestimating the impact iPhone sales will have on the marketplace. The analyst also pointed to results from a recent report: 19 percent of survey respondents either currently own or plan to purchase a high-end device in the next year, and that number compares to 23 percent of respondents who said they are either extremely or somewhat interested in purchasing an iPhone in the 12 months following its release.

For more on the iPhone:
- see this WirelessWeek article on Cook's remarks
- check out this report from ipodnn on Huberty's analysis

Verizon: Price tag too high for wireless biz

Tue, 23 May 2006 20:01:37 -0400

Verizon Communications quelled rumors about an imminent deal to buy out Vodafone Group's stake in its wireless business. Verizon doesn't want to pay the premium amounts that analysts are placing on the company. Verizon CFO Doreen Toben said during a Morgan Stanley analysts conference that analysts' estimates of the value of Verizon Wireless are well above the premium Verizon wants to pay. She said that Verizon would be "willing to consider paying what we reflect is the fair value." Toben said she is studying what Verizon Wireless is worth, factoring in its multiples during the next few years and looking at whether a purchase would add to earnings in the first year. Analysts have placed a value of as much as $50 billion on Verizon Wireless. It appears Verizon wants to pay somewhere around $38 billion.

To read more about Verizon's comments regarding its wireless business:
- take a look at this report from Dow Jones

Rumor Mill: 75% chance of iPhone in next year

Tue, 21 Mar 2006 19:01:36 -0500

The rumor mill is churning at full steam once again, with last week's somewhat guarded prediction that Apple is 75 percent likely to launch a mobile handset, dubbed "iPhone," within the next 12 months. Well, a year is a very long time in this industry and 75 percent isn't a sure thing, but regardless the odds are good enough for the marketwatchers and soothsayers. I, for one, am staying mum.

Here's a round-up of some of the articles jumping into hyperdrive:
- Investment firm PiperJaffray kicked things off last week with this article
- MobileMag's article, "Morgan Stanley says iPhone is for real, made in Taiwan"
- Blog entries like this one predict that the iPhone will hurt Motorola's sales

Sprint files second suit against Nextel Partners

Tue, 18 Oct 2005 20:01:37 -0400

Sprint Nextel has filed another suit against Nextel Partners, further muddying the dispute with its affiliate. The second suit seeks a proxy statement from September, forecasts and business plans for 2005 and beyond, agreements relating to the possible change in control for Nextel Communications, and information relating to the hiring of Morgan Stanley. Sprint had requested the documents earlier in the month but claims that Nextel Partners has ignored its request. In the initial suit, Sprint attempted to get a Delaware judge to rule on certain disputes over the process of valuing Nextel Partners, which Sprint may be forced to buy. The companies have yet to reach a consensus on the deal's price tag.

For more on the latest suit:
- take a look at this article from Dow Jones

Rumor Mill: Ericsson to buy Marconi for $2.3B

Sun, 09 Oct 2005 20:01:37 -0400

According to a report in The Mail, Ericsson is planning a $2.3 billion acquisition of UK-based telecom equipment maker Marconi, roughly twice its current market value. The hefty price tag takes into account a £413 million UK tax loss and the £228 million hole in Marconi's pension fund. The report claims Morgan Stanley, JP Morgan and Lazard are representing Marconi in the deal with Enskilda acting for Ericsson. Ericsson plans to retain 80 percent of the company while piecemealing the remainder. Marconi cut more than 800 jobs in May after losing a £10 billion BT contract to Ericsson. Marconi was previously in talks with Siemens, Alcatel and China-based Huawei. An announcement is expected within 10 days.

For more on the rumored Ericsson, Marconi deal:
- read this piece from ZDNet

Soma secures $50M in financing

Sun, 12 Jun 2005 20:01:38 -0400

Wireless "last mile" developer SOMA Networks reports it has raised $50 million million in new funding. The latest financing round, led by Temasek Capital and Morgan Stanley Venture Partners, complements $15 million in strategic financing SOMA closed in late 2004. SOMA says the financing has been earmarked for global expansion.

With its wireless technology, SOMA aims to solve the problem of the last-mile using a wireless technology hybrid of WiMax and HSDPA. The firm promises to help providers cover local access markets rapidly and cost-effectively and to provide broadband, voice and applications service segments over a single system.

For more on Soma's jackpot:
- read this company press release

PLUS: WiMax moving closer to reality. Article