AT&T to buy Verizon Wireless? Telecom M&A speculation is almost getting that absurd. This week has seen the re-emergence of two big M&A rumors: "Verizon Wireless to acquire Alltel" and "Comcast to acquire Sprint Nextel." While neither are likely to happen, it's notable how quickly the rumor mill is willing to suggest that a lagging company should cash out.
In yesterday's issue, we covered the Verizon Wireless-Alltel rumor, including the obvious benefits it would bring to Verizon Wireless' coverage area and its claims to being number one in the U.S. market. (See story number 4 below). Of course, spectrum issues would surround such a merger as well. Verizon Wireless is considered by many to be one of the more interested carriers in the upcoming 700 MHz spectrum auction. This auction could enable the carrier to fill those same coverage gaps driving the Alltel rumor. What's more, this spectrum will cost far less than the estimated $30 billion an Alltel acquisition would require. Thus, many analysts conclude that private equity groups would acquire Alltel, if anyone.
Today also marks the resurfacing of the rumor mill's other favorite carrier acquisition target: Sprint Nextel. Sprint has plodded through a string of unimpressive financial quarters and today's results continue that trend. (See today's top story). Some reports are circulating once again that maybe one of Sprint's cable MSO partners (Comcast) would be interested in acquiring Sprint. After looking at the company's financials and considering that Comcast and the other MSOs are all set to benefit from Sprint's wireless offerings, what would compel an MSO to snatch Sprint up?
Alcatel-Lucent, Sprint Nextel, Cingular/AT&T... I'm about ready to replace the hyphen key on my keyboard. This industry has seen an amazing number of mergers and acquisitions during the past three years. So, let's digest. Perhaps these rumors are simply the dreams that follow an industry-wide feeding frenzy. -Brian