Here's a look back at the recent events to influence the telecom capital markets, including Verizon's downturn on the Dow Jones Industrial Average:
Verizon takes a stock hit
Verizon is a typically robust performer, which makes its recent disappointing returns all the more surprising. The carrier experienced a 1.2 percent drop on the Dow Jones Industrial Average on March 11, placing it among the bottom five stocks. The drop could stem from investor response to comments made by Sprint chairman Masayoshi Son to the American press.
Son made waves across the telecom industry in recent days prior to a scheduled presentation in front of Chamber of Commerce members. As RCR Wireless previously reported, Son previously made critical remarks regarding the state of the U.S. wireless industry, particularly Verizon and AT&T's firm grip on the market. A key component of his presentation reportedly addresses the need for competition in the domestic mobile market.
The Motley Fool surmised that these comments contributed to Sprint's recent misfortune on the capital markets as well as AT&T's shares falling 0.9 percent. Meanwhile, Sprint shares have risen 1.4 percent. If Sprint's proposed acquisition of T-Mobile goes through unimpeded by antitrust officials, the U.S. wireless landscape could look very different in the coming years, as the carrier would be in a stronger position to take on Verizon and AT&T.
Concerns loom over potential Sprint/T-Mobile merger
Some industry observers have expressed doubts that an acquisition of T-Mobile assets by Sprint would be enough to overcome the substantial lead Verizon and AT&T have in the wireless market, however. According to 24/7 Wall St. editor Douglas McIntyre, the resulting company would still be dwarfed by both AT&T and Verizon. Furthermore, McIntyre said that Sprint's and T-Mobile's financial issues would continue to loom following any potential merger.
A major hurdle for Sprint's aspirations as market leader is the head start that Verizon and AT&T have regarding network footprint. McIntyre noted that both carriers have spent years building unified brands that stretch across various telecom markets including fiber, landline and B2B operations. Meanwhile, McIntyre cautioned that a Sprint/T-Mobile merged organization would need a considerable amount of time to properly integrate their operations and services, potentially putting them further behind.
Bouygues SA looks to sell assets to Iliad SA
Antitrust concerns are not strictly an American phenomena; European officials are just as worried about telecom consolidation as their U.S. counterparts. According to Bloomberg, French corporation Bouygues SA has sought to bolster its wireless operations by merging with Vivendi SA, prompting concerns on that such a move would consolidate the French wireless market and stifle competition.
The news outlet reported that Bouygues SA officials are now attempting to alleviate such concerns by selling spectrum and network assets to Iliad SA for $2.5 billion. Bouygues representatives stated that this transaction would demonstrate the organization's dedication to competitive balance in France's wireless market.
Analysts give a thumbs-up to China Telecom
China Telecom's place in the hierarchy of Chinese carriers has been faced with a great deal of speculation in recent weeks. As the third-largest telecom service provider in China, the organization has had difficulty penetrating wireless market leader China Mobile's hold on the 4G sector. RCR Wireless previously noted that the carrier had taken steps to secure its position in China's 4G landscape, forming partnerships with equipment manufacturers and obtaining the proper licensing to build out 4G services across the country.
Those efforts appear to be paying off, as several brokerages have recently reassessed the company's stock, giving it their seal of approval. According to WKRB News, nine firms in total have given China Telecom an average recommendation of "Buy" in recent days. If the carrier can capitalize on its momentum and make inroads into the mainland China 4G market, expect such positive outlooks to become a more common occurrence.
