Verizon Communications (NYSE:VZ) is not opposed to AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA so long as it does not bring additional regulation, Verizon Communications CFO Fran Shammo said, indicating for the first time that Verizon supports the merger.
Speaking at the Morgan Stanley Technology, Media and Telecoms conference in Barcelona, Shammo said that the wireless industry needs more consolidation but said that it should not come with more FCC regulations. "We have been very silent on this one," he said, according to Dow Jones Newswires. "The reason we've been silent [is] we said there needs to be consolidation and as long as there is consolidation without regulation we don't have an objection to it."
Shammo's stance this week is slightly--but importantly--different than one he took on the deal in August. At the time, he said the company was not in favor of or opposed to the AT&T's proposed purchase of T-Mobile, but also worried about increased regulation. "We believe the industry does need some consolidation, but it has to be consolidation under the right terms," he said. "If it goes through, we need to make sure it goes through without regulation."
Although Verizon's stance on the deal will likely not have much of an impact on the Department of Justice's antitrust lawsuit to block the merger, it is notable in that it puts Verizon farther away from Sprint Nextel (NYSE:S), which is vehemently opposed to the deal and has filed a lawsuit to block it. A trial for the Justice Department's case is expected to begin Feb. 13.
At the conference Shammo also touched upon Verizon's relationship with Vodafone; Verizon owns 55 percent of Verizon Wireless and Vodafone owns the other 45 percent. Verizon Wireless will pay a $10 billion dividend to the two parents early next year, the first since 2005.
Shammo said the relationship between the two companies is improving and has evolved from a purely financial one to more of a strategic partnership, with the parent companies collaborating on purchasing, building networks, and serving corporate clients. However, Shammo also said Verizon has not agreed to an annual dividend payout from Verizon Wireless, since Verizon still has gross debt on its books that Shammo said should be paid down.
"I don't want debt on Verizon Wireless' books, it's not a good cost structure for us," he said, according to Reuters. "They have to pay down their debt, we're going to need more spectrum in 2015 and if an opportunity comes up we'll certainly acquire that spectrum, so there's a lot of dynamics here and it's too premature to set anything."
- see this Dow Jones Newswires article
- see this Bloomberg article
- see this Reuters article
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