This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

AT&T CEO Says Large Telco M&A Unlikely

NEW YORK ( TheStreet) -- AT&T (T - Get Report) CEO Randall Stephenson said on Tuesday he doesn't expect large scale consolidation among the wireless industry's four biggest carriers, given the Department of Justice's enforcement of antitrust laws in recent years.

Stephenson said at the Goldman Sachs Communacopia conference on Tuesday that the DOJ made clear signs it won't allow consolidation from four nationwide players in the wireless industry to three. He cited AT&T's failed $39 billion acquisition of T-Mobile (TMUS - Get Report) in 2011 and also noted the antitrust regulator's more recent objections to a proposed combination between airlines AMR and U.S. Airways (LCC)

"For the next three years, we feel large scale M&A is not likely," Stephenson said of the U.S. telecom sector. "It seems to us the DOJ has been loud and clear," he added.

The AT&T CEO did reflect on the impact of merger and acquisition activity in the telecom sector, which sped up in the wake of the company's failed bid for T-Mobile.

Noting acquisitions such as SoftBank's recapitalization and takeover of competitor Sprint (S), Stephenson said the wireless industry is "going to get more competitive and it has gotten more competitive." In particular, he said competition has increased in the low-end of the wireless market and was one rationale for AT&T's recent acquisition of Leap Wireless (LEAP).

Sprint's recent acquisition of wireless provider Clearwire (CLWR) also indicates that the Federal Communications Commission may be more amenable to spectrum purchases among large providers, Stephenson said.

In terms of AT&T's core business, Stephenson forecast that the company's pension plan will end the year fully funded. The AT&T CEO also spoke about the company's focus on the transmission of wireless and wireline video service in coming years.

AT&T will make a big investment in the connected car and all of the video transmissions that are expected to emanate from automobiles as soon as 2014. "The future for us whether it is fixed line or wireless is our video capability," Stephenson said.

Those investments may also prove to be a benefit to AT&T's overall profit margins, particularly in its wireless business.

Stephenson said that as AT&T deploys its nationwide LTE network, capital spending is becoming roughly 50% more efficient. In New York City, about half of AT&T's total data traffic has moved to the company's LTE network, he said.

"We believe the cost dynamics are working in our favor ... I have never been in a situation where the bias for capital spending is a downward bias," Stephenson said, adding that it would be disappointing if the company's wireless margins don't expand by the end of the year.

One area of margin expansion may come from AT&T's changing smartphone subsidy model, as the company grows its customer base and renews its existing user base. Fourth-quarter wireless margins may improve as AT&T shifts its subsidy structure to 24-month upgrades, Stephenson said.

AT&T shares have gained just over 1% in 2013, underperforming the S&P 500.

Verizon Extends Dividend Paying Legacy in Vodafone Deal

Verizon's Net Neutrality Battle with the FCC Not About Free Speech

-- Written by Antoine Gara in New York.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 0.00%
T $38.91 0.00%
TMUS $39.66 0.00%
VZ $50.68 0.00%
FB $117.43 0.00%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs