Consolidation Ahead

The Wall Street Journal reported that Dish Networks is in talks to merge with T-Mobile US, which would put Dish Chief Executive Charlie Ergen as the company’s chairman with T-Mobile’s John Legere as CEO. As expected, industry analysts have a lot to say about this potential deal:

Colby Synesael of Cowen and Company: “We have called out in multiple recent reports that we view T-Mobile as an ideal and attractive takeout candidate given the only viable U.S. wireless assets available. On that note, while timing is not ideal we think cable MSO’s including Comcast could revisit strategic options and also make an offer for T-Mobile…We believe regulatory [issues] would be a non-issue and likely favored considering 1) the FCC approval of AT&T and DirecTV is eminent and 2) four players will remain in the market with an even stronger competitor against AT&T and Verizon. Derivative calls: would be viewed as negative to Sprint who effectively gets nothing while T-Mobile/Dish get stronger, positive for the towers where risk of a Sprint/T-Mobile merger goes to zero and we get more clarity on how/when Dish spectrum would get put to work, and we’d argue negative to AT&T/Verizon from the perspective T-Mobile would be a more formidable competitor.” Continue reading here. 

Towers to Benefit When Dish Deploys

Jonathan Schildkraut of Evercore ISI attended the Dish Network investor meeting hosted by the Evercore ISI Cable, Satellite & Media Analyst Vijay Jayant. Schildkraut noted that they walked away with few new details, but did explain how the firm thought towers would benefit when dish deployed their spectrum. “In our view, the deployment of Dish’s spectrum is a ‘when,’ and not an ‘if.’ And, as we highlighted in our June 1 Evercore Telecom Newsletter lead “Updated Tower Thoughts – Tower Trends vs. Thematics,” we believe Dish’s search for a wireless Chief Marketing Officer highlights that the decision around timing could happen as soon as the next 12-18 months. Further, the use of a partner in placing spectrum into use would accelerate the time to revs recognition for tower operators (Mr. Ergen said it would be most capital efficient to deploy all its spectrum simultaneously), though we acknowledged it would be less impactful than a full network build-out.”  Continue reading here. 

What’s Going on With the Spenders & Vendors?

Andrew Gardiner of Barclays took a detailed look at trends throughout the United States regarding the spenders and vendors in the telecom infrastructure industry. “We take a look at the most glaring disconnect from 1Q15 results, namely the dramatic decline in U.S.-driven equipment revenue,” Gardiner wrote. “The market anticipated a slower start to the year for U.S. carrier capex, but the significant double digit year over year declines in vendor revenue suggest a greater shift within operator networks as focus remains on balancing the need to support rising data traffic with optimizing network operating costs. We continue to view the wireless infrastructure end market as challenged, even more so given the material drop in revenue that vendors are experiencing post-4G deployments.” Continue reading here. 

T-Mobile Unlikely to Partner With Others

Kevin Smithen at Macquarie Securities recently commented that, in his view, T-Mobile is unlikely to partner with anyone other than Dish Network in the near future. “We see limited operational synergies between Altice/Suddenlink, and a U.S. wireless player and the lack of meaningful FCF [free cash flow], and upcoming spectrum needs at T-Mo might make the asset less attractive to Altice anyway,” Smithen wrote. “For Comcast, an outright purchase of a wireless network is possible, but likely premature at this point; we believe the company is likely to focus on returning capital to shareholders in the near-term. Continue reading here. 

What’s the Big Idea?

Idea Cellular is looking to reduce its debt of 140 billion rupees ($2.21 billion) by selling its 11,000 cell towers throughout India. Idea Cellular is the third largest mobile service provider in India, and these assets have drawn the interests of Malaysia’s Axiata, Bharti Infratel, and American Tower Corporation. Idea’s towers have been the subject of several deal attempts over the past few years.American Tower currently owns over 13,000 towers across 22 telecom circles in India. “Spectrum policy is moving towards a very rational endgame, allowing the major operators in India to have enough spectrum to go ahead and deploy advanced data services like we’ve just talked about in the remarks, in India, so that’s a plus. Continue reading here. 

OSHA’s Stand-Down was a Success

OSHA announced that millions of workers and thousands of employers participated in the National Safety Stand-Down to Prevent Falls in Construction from May 4 to 15. “Last year’s Stand-Down was a big success. More than 5,000 employers talked about fall protection with more than a million workers. It was a tremendous commitment to safety on the part of businesses and workers alike. I am confident that we can do even better this year,” said U.S. Secretary of Labor Thomas E. Perez before the Stand-Down began. And it looks like they did do better, with a million workers participating in the event earlier this month. “The construction industry is so important to our economy. We all depend on it every day. It drives growth and prosperity,” Perez continued. “It generates good, middle-class jobs that can support a family. But we have to make sure those jobs are as safe as they can possibly be. That’s why fall prevention and this Stand-Down are so important.” Continue reading here. 

Small Cells Are Big Topic

Verizon Communications’ EVP and CFO, Fran Shammo, spoke at the JPMorgan Global Technology, Media, and Telecom Conference yesterday. Verizon, like Crown Castle, has been very vocal about their focus on small cells. Phil Cusick of JPMorgan asked Shammo about building and managing their own small cell network, and if the company would want to own fiber or just use someone else’s. “We lease a lot of fiber today. There is a lot of competition actually in the fiber world. So, we actually don’t own a lot of fiber that we have, we lease it, we own the electronics on both ends of it but these are long-term leases and we’ve done this for years, so this is nothing new to us,” Shammo explained. “We don’t need to own all of the small cells, we just entered into an agreement up in Boston for 400 site [densified] antenna system, that someone else build out, got all the zoning, has all the fiber and so we’re leasing that from them. So there is a lot of alternatives out there today to create capacity and it doesn’t mean that I have to own and build and control everything, I can do that through third parties, I mean it similar to towers, I don’t own towers but I still run my network off those towers and as long as I get the protections in the agreements that I need for the longevity then it’s a perfect solution for us.” Continue reading here.