Tag: T-Mobile

Is DISH desperate for spectrum?

Ben Kolada

Contact: Ben Kolada

Eager to enter the cellular market, DISH Network has announced that it is interested in acquiring Clearwire for $3.30 per share, or about $4.8bn. The deal is actually a ‘take two’ for DISH, and shows the company’s desire (desperation?) to enter the wireless market. However, the market for wireless spectrum is so tight that those with such assets aren’t likely to sell them.

With mobile bandwidth consumption exploding, wireless spectrum is among the most coveted assets by wireless carriers. Over the past two years, there have been a handful of high-priced spectrum acquisitions announced by AT&T, Verizon, T-Mobile and Sprint. The DISH proposal values Clearwire’s spectrum at $2.2bn.

DISH’s desperation to enter the wireless market is apparent in the fact that it previously tried to acquire some of Clearwire’s spectrum assets before Sprint announced that it would buy the remainder of Clearwire it didn’t already own. Obviously, the DISH-Clearwire deal never came to fruition, and the new transaction is likely to fail as well for the same reason.

This time around, spectrum is again at the top of the list of concerns. In responding to the offer, Clearwire issued a press release summarizing a list of Sprint’s objections. First and foremost, Sprint argues that its pending agreement with Clearwire prohibits the company from selling spectrum assets without Sprint’s consent.

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Will SoftBank-backed Sprint look to M&A?

Ben Kolada

Contact: Ben Kolada, Thejeswi Venkatesh

After churning through the rumor mill for the past half-week, official word came Monday that Japanese telco SoftBank is making a significant investment in Sprint, the third-largest mobile carrier in the US. SoftBank is acquiring 70% of Sprint in exchange for approximately $20bn, of which $12bn will be distributed to shareholders in exchange for 55% of the existing company. The remaining $8bn will be used for network expansion, primarily related to deploying 4G LTE. Beyond those efforts, the new Sprint could look to use some of its newfound cash to expand via M&A.

In announcing the deal, Sprint noted that this investment comes at a prime time. The company is continuing to execute on a multiyear turnaround. After Dan Hesse took the helm in December 2007, he spent the next three years focused on reversing Sprint’s customer attrition and improving its beleaguered brand. (Of course, some of those difficulties stemmed from its acquisition of Nextel in 2004. However, regarding customer service, those issues have largely been resolved, as the table below shows.) SoftBank’s move comes during Sprint’s investment phase, where it is now focused on building out its network and improving operational efficiency.

Now, with a stronger balance sheet, we wonder if SoftBank-backed Sprint will look to M&A for accelerated expansion. SoftBank has already shown a willingness to consolidate telecom assets in its home Japanese market. Earlier this month, it announced that it would buy Japanese wholesale broadband provider eAccess for $1.84bn. And in 2006, it picked up Vodafone K.K., the Japanese mobile unit of Vodafone Group, for about $16bn.

Although Sprint has struggled with M&A in the past, it could be spurred to move once more, as there are only a finite amount of targets left in the US and one was recently removed from reach. Earlier this month, T-Mobile announced that it was acquiring MetroPCS, which had long been rumored as a Sprint acquisition target. After MetroPCS, the next most likely candidate for Sprint to buy is Leap Wireless, which, including its cash and debt, is valued at about $3.2bn.

Wireless service provider satisfaction rating by company – ranking of customers who say they are very satisfied with their current wireless provider

Rank October 2006 September 2012
1 Verizon – 45% Verizon – 48%
2 T-Mobile – 33% Sprint – 32%
3 Cingular (now known as AT&T) – 30% T-Mobile – 28%
4 Sprint – 25% AT&T – 21%

Source: ChangeWave Research

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Survey: Consumers may hang up on combined AT&T-T-Mobile

Brenon Daly

Contact: Brenon Daly

As the largest telco deal announced in a half-decade, AT&T’s proposed purchase of T-Mobile USA has had an outsized impact on the still-nascent mobile market. To get a sense of some of the implications, our subsidiary ChangeWave Research surveyed more than 4,100 consumers at the end of September on a number of questions, including a few that touched on the transformative transaction. The takeaway: customers give the thumbs down to AT&T’s planned consolidation move, largely because of network performance problems.

On questions about wireless service providers, the ChangeWave survey found that T-Mobile and AT&T each have the lowest percentage of subscribers who say they are ‘very satisfied’ with their service. Only one-quarter of T-Mobile subscribers said that (half the level of industry leader Verizon Wireless), with only one out of five AT&T subscribers saying that. The combination of AT&T and T-Mobile would create the largest US wireless carrier, with roughly 130 million subscribers.

Perhaps more of an indictment of AT&T’s service, however, came when ChangeWave asked existing T-Mobile subscribers whether they were planning to continue with the combined company, assuming the acquisition clears regulatory review. One of five current subscribers said they planned to change wireless providers, with another 38% saying they didn’t know what they would do. Just one-third of current T-Mobile subscribers indicated they will continue subscribing if AT&T takes over.

If you are interested in finding out more about the consumer smartphone market and trends, be sure to join ChangeWave for a special Webinar on Thursday at 1:00pm EST. The presentation will cover overall market demand, as well as look specifically at the recently launched Apple iPhone 4S and the all-important holiday season forecasts by consumers. To join the Webinar tomorrow, simply register here.

Google adds to NFC with Zetawire

Ben Kolada2 Comments

Contact: Jarrett Streebin, Ben Kolada, Vishal Jain

Google continues to gobble up startups, and we’ve just uncovered a deal that supports its near field communications (NFC) ambitions. We’ve learned that Google recently picked up Zetawire, a Canadian startup focusing on mobile payments transactions. Like most of Google’s buys, this was a small deal, but it plays into a bigger market.

Little is known about Toronto-based Zetawire, but we suspect that the company was in the pre-revenue stage, making its only valuable asset a patent and corresponding trademark awarded by the US Patent and Trademark office. According to the filing, the patent provides for mobile banking, advertising, identity management, credit card and mobile coupon transaction processing. These features would allow a consumer to make purchases using their smartphone instead of their credit card. Think of a smartphone with this technology as a virtual wallet (in fact, the company has also trademarked the name Walleto for these very purposes).

This acquisition bolsters Google’s position in the coming wave of NFC and the phone as a device for payments, tracking and identification. For Google, the timing of the deal couldn’t have been better. Although we understand that the transaction closed in August, just earlier this month Google released its Nexus S smartphone, which has built-in NFC capabilities. In the meantime, Google’s competitors are hard at work. Research in Motion has also filed a patent for NFC functions, and Nokia in June announced that all of its phones will have NFC capabilities by 2011. Isis, a partnership involving telcos AT&T, T-Mobile and Verizon, is also planning a similar mobile wallet and UK startup Proxama has been working on NFC-focused technology for payments and advertising. (We’ll take a deeper look at the Zetawire purchase and the greater NFC market in an upcoming Post-Merger IQ.)