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TheStreet Open House

Buyouts, iPhone Paranoia, Dominate Wireless

Stock quotes in this article: T, VZ, AAPL, S, PCS

Moffett also unveiled a new bearish twist for the wireless industry on Wednesday, in a note arguing that Verizon's parent Vodafone may look at selling its 45% stake the U.S.-based wireless leader.

"With Verizon trading at all time high multiples; US investors appearing to suspend disbelief on the impending deterioration of the US wireless market; and an urgent need for major strategic change in Europe, there may never be a better time for Vodafone to relinquish its 45% of Verizon Wireless," writes Moffett, in a note that highlight's Vodafone's cost disadvantages and Verizon's high valuation as key possible drivers of a stake sale.

Moffett also highlights a fast consolidating U.S. market that may increase competition on wireless leaders like AT&T and Verizon, who offer tiered pricing smartphone data plans.

"With SoftBank's cash infusion into Sprint and T-Mobile's merger with MetroPCS and both companies apparently intent on using price as a key weapon in their fight for market share; it is hard to imagine that the market will not deteriorate for Verizon in the longer term," the analyst writes.

Earlier in October, Sprint's sale to Softbank of Japan forced Moffett to call off odds making on the carrier's eventual bankruptcy.

For now, telecom investors can breathe a sigh of relief on the impact of the iPhone 5 on carrier profit margins. Still, a telecom sector reshuffle on Sprint's takeover and T-Mobile's merger with MetroPCS (PCS) -- in addition to new data that an iPhone subsidy drain will hit -- are now giving new life to bearish predictions for wireless giants like AT&T and Verizon.

For more on the impact of the iPhone 5 on corporate earnings, see whether iPhone 5 sales can buy Best Buy (BBY) some time. See why AT&T is still hungry for more spectrum and how a tower deal twists consolidation for more on the wireless industry.

-- Written by Antoine Gara in New York

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