The increasingly competitive nature of the domestic space is expected to continue squeezing regional operators, according to a new report from Canaccord Genuity, with potential causilities to include MetroPCS and Leap Wireless.
In its report, the investment firm noted that following recent meetings with leadership at the nation’s four largest operators, it expects pricing pressure to increase with the result being “absent M&A activity, it will be increasingly difficult for the smallest competitors in the market, Metro PCS and Leap Wireless, to remain relevant over the long term.”
The firm noted that following recent rate plan changes from Verizon Wireless, which many expect to be echoed in the near term by rival AT&T Mobility, and expected changes coming from T-Mobile USA, the market for unlimited voice and messaging services that MetroPCS and Leap Wireless rely on will come under greater pressure. Verizon Wireless is set to roll out new rate plans on June 28 that will include unlimited voice and messaging, with consumers selecting the amount of mobile data they want to share between devices.
Leap’s stock price (LEAP) has remained relatively stable since the Verizon Wireless announcement, though was trading down around 3% today. MetroPCS’ stock (PCS) has had a more downward trajectory, with the carrier’s stock trading down more than 3% today.
T-Mobile USA network plans
Canaccord Genuity also noted that T-Mobile USA’s spectrum refarming plans will result in the carrier reserving only 5 megahertz of spectrum in the 1.9 GHz band for its legacy GSM-based services, 20 megahertz in the 1.9 GHz band and 20 megahertz in the 1.7/2.1 GHz band to support HSPA+ customers and 15 megahertz of spectrum in the 1.7/2.1 GHz band to support its LTE rollout.
T-Mobile USA announced earlier this year plans to refarm its spectrum assets that will see its LTE plans rollout in the 1.7/2.1 GHz band that will align with similar LTE rollouts expected by Verizon Wireless and AT&T Mobility. The move is expected to foster lower pricing for equipment and devices as well as allow greater access to devices, including possibly Apple’s iPhone.
As for funding operations, the research firm said it does not believe T-Mobile USA will look towards M&A opportunities and that it was more likely that parent company Deutsche Telekom could look at a partial initial public offering to generate investments. T-Mobile USA is also rumored to be in talks to sell off its approximately 7,000 cell sites, which could generate between $2 billion and $3 billion in revenues.
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