Capital markets: AT&T acquisition gets FCC approval


In this week's capital markets news round-up, we take a look at the status and impact of AT&T's recently finalized acquisition of Leap Wireless.

AT&T poised to benefit from acquisition
The FCC recently approved AT&T's bid to acquire wireless service provider Leap Wireless International, Inc.. AT&T acquired a wide range of properties from Leap – and its subsidiary, Cricket Communications – including stock, retail stores, existing subscriptions and licenses. Cricket services 4.57 million subscribers according to recent figures, all of whom will have their contracts migrated to the new Cricket line brand over the next 18 months.

According to Seeking Alpha, the acquisition should prove to be beneficial for AT&T as it will enable the telecom to build off of Leap's unused spectrum, which reportedly provides coverage for 41 million customers. In addition, AT&T's massive volumes of networking resources will allow it to scale up Leap's business model – including low-cost rate plans – and expand it to reach a larger audience.

TPG Telecom sees shares spike
Australia-based TPG Telecom recently saw its stock value hit an all-time high following the release of positive earnings for the first half of fiscal year 2014 as well as predictions for the rest of the year. According to Reuters, TPG shares surged as much as 10 percent to hit A$6.35 in the wake of the rosy outlook. TPG reported a year-over-year 15 percent increase in after-tax net profits of A$90.1 million during that time frame.

The Sydney Morning Herald noted that TPG Telecom witnessed a net increase of approximately 36,000 additional subscribers in the first half of the fiscal year. In addition, TPG Telecom may have an opening to acquire Australian ISP iiNet since its founder, Michael Malone, recently left the company.

Orange sets its eyes on Spain
Orange recently announced the hiring of an adviser to help it craft a stronger and more focused strategy for its operations in Spain. Reuters reported that the French telecom retained the services of Bank of America Merrill Lynch to offer guidance in this area. According to the source, Orange may be responding to speculation that the Spanish telecom market is rapidly facing consolidation as organizations attempt to cope with dipping revenues.

Orange CEO Stephane Richard touched upon the issue of consolidation when he recently spoke to the French newspaper Les Echos.

"Consolidation in Europe is happening in the mobile sector but will also be affected by convergence between fixed and mobile," Richard told the news outlet, according to Reuters. "Orange will take part. There are countries in Europe where we operate only in mobile for now and where we will have to move."

One of the possible moves that Orange may look to make in the Spanish telecom market is to acquire competitor Jazztel.

Chinese telecoms see varying fortunes
According to reports recently released by China's top three telecoms, their level of success dwarfs that of leaders in the U.S. market. For instance, Forbes reported that China Telecom – the third largest wireless telecom in China – currently has approximately 185 million subscribers. Meanwhile, the U.S.'s second largest telecom, AT&T, has only 110.4 million subscribers. Holding the second place spot in China, China Unicorn has a mobile subscriber base that is more than twice the size of AT&T's at approximately 284 million users, according to The Wall Street Journal.

When comparing the two nations' market leaders, China's easily wins out. Despite seeing its net income drop 16 percent in the fourth quarter – accounting for $4.9 billion – China Mobile still has 775.6 million subscribers, positioning it as the worldwide leader, according to Bloomberg News. Verizon Wireless, on the other hand, has nearly 200 million total connections, including postpaid and retail.

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