Like teenagers at a school dance, wireless carriers and would-be service providers are anxiously waiting for the music to start.
The FCC will lift its so-called “quiet period” later today following the wrap-up of the incentive auction of 600 MHz spectrum, and analysts and industry insiders expect the M&A talk to heat up quickly.
The CEOs of Verizon, T-Mobile and SoftBank have all voiced their interest in potential tie-ups in the last week, as analyst and FierceWireless contributor John Lowenstein noted yesterday, and Sprint CEO Marcelo Claure noted via Twitter that he was in Tokyo to meet with the parent company and discuss the carrier’s business.
Speculation of major tie-ups has increased in recent months with the election of Donald Trump in the midst of the auction. While it’s too early to know exactly how regulatory agencies might react to any specific deal, analysts and executives generally agree that they’ll demonstrate a far lighter regulatory touch under Trump than they did under Barack Obama.
Meanwhile, the U.S. wireless market has grown increasingly competitive, as evidenced by the launch of unlimited-data plans by all four major carriers. The market will only get more heated later this year as cable companies such as Comcast and Charter launch wireless service. Meanwhile, Dish Network—which sits on a pile of unused spectrum—continues to plot its course onto the dance floor.
Shares of both T-Mobile and Sprint climbed late last year on renewed speculation that a tie-up between the carriers could still be in the offing. And they continued to rise after Trump announced earlier this week that SoftBank will invest $50 billion in the U.S. in an effort to create 50,000 jobs.
Much of the speculation regarded a merger between T-Mobile and Sprint, but that scenario still faces significant challenges. T-Mobile has become much more valuable in the last few years as its business has thrived, and Sprint’s precarious financial position may forestall any deal. Meanwhile, much of Sprint’s value lies in its spectrum holdings rather than its actual wireless business, further complicating any tie-up scenario.
But there’s no shortage of other potential deals in the coming months, according to Matthew Niknam, a research analyst with Deutsche Bank.
“M&A: The possibilities appear endless,” Niknam wrote last month in a research note analyzing the firm’s recent media and technology conference. “We expect anti-collusion rules associated with the broadcast spectrum auctions to be lifted by mid-April. Ahead of this, and given potential for a more business-friendly tilt at the DOJ and FCC, the topic of M&A was front and center in our sessions and investor discussions. Regarding potential intra-wireless M&A, Sprint noted it competes with 14-15 ‘platforms’ (framing cable/wireline/other peers as competitors), and implying less concentration risk in an intra-industry deal where four players consolidate to three.”