Updated to include analyst comments throughout
NEW YORK ( TheStreet) -- A year ago AT&T (T) was preparing an antitrust defense for its proposed takeover of T-Mobile USA. Now, after regulators blocked the deal, AT&T is likely bracing to protect its position in the U.S. wireless industry after a string of October merger activity that has T-Mobile partnering with MetroPCS (PCS) and Japanese telecom Softbank investing billions in new capital for a controlling stake in Sprint (S), the industry's third player.
Sunday's announcement of a $8 billion equity capital infusion into Sprint at $5.25 a share by Softbank -- and a tender offer for 70% of company's existing shares at $7.30 -- revitalizes the company's finances. It also energizes Sprint's competitiveness as an alternative national carrier to industry stalwarts AT&T and Verizon (VZ).
Sprint's takeover and the planned merger of MetroPCS and T-Mobile earlier in October are likely to add financial and network strength to the industry's number three and four players, both of which undercut AT&T and Verizon on pricing and unlimited smartphone data plans.At this time last year, industry watchers were bracing for a telecom sector 'duopoly' between AT&T and Verizon, as virtually every other carrier struggled to stay afloat in the highly capital intensive business of building national networks to handle smartphone data loads. In the wake of Sprint and MetroPCS's M&A, anticompetitive talk is all but eviscerated and the prospect that unlimited data plans can challenge top tier players is far more credible. With new financial support, Overland Park, Kan-based Sprint has billions more to complete its plan to build a 4G national wireless network, called Network Vision. Once Network Vision is finished, Sprint, which is a distant third in the U.S. wireless market to the 30%-plus market shares held by AT&T and Verizon, expects its unlimited Apple (AAPL) iPhone data plans will help pull cell phone customers from larger carriers. To start 2012, speculation on Sprint centered less on whether subscribers would join and more on handicapping the company's eventual bankruptcy, as it plowed billions into a network revamp and a contract to carry the iPhone. Succeeding on Network Vision became all the more crucial for Sprint in the wake of MetroPCS's merger with T-Mobile because it faced a new challenge to a fleeting industry position. In that tie-up, T-Mobile is poised to add millions of wireless users and a cashflow positive business to its national 4G network, putting the carrier on track to gain on its position as a low cost, unlimited data alternative. Meanwhile, the merged business would be in closer running for Sprint's third spot in the wireless market. Now, after Sprint finally courted a deep-pocketed partner, the U.S. wireless industry looks poised for a renaissance, with cost-competitive and unlimited data carriers in a position to challenge industry leaders. "
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV