Mergers highlight this week’s round-up of issues affecting the telecom capital markets as a T-Mobile executive comments on a potential merger with Sprint:
Sprint/T-Mobile merger speculation continues
There have been numerous developments in recent weeks regarding a potential merger of Sprint and T-Mobile assets. As RCR Wireless reported earlier, Sprint representatives Masayoshi Son and Dan Hesse met with U.S. officials last week to plead their case for the proposed merger, arguing that the resulting organization would be able to better compete with AT&T and Verizon in the U.S. mobile and wireless markets.
T-Mobile executives have had their say in recent days as well. Reuters reported that the carrier’s CFO, Braxton Carter, reaffirmed the company’s dedication to getting a deal done, directing his comments toward investors and shareholders.
“It’s not a question of if, it is a question of when,” Carter said at a recent telecom conference, according to the source. He later added, “To take a third-scale national player that has the scale benefits with the right business model could be very competitively enhancing in the U.S.”
Skeptics of such a deal ever being completed point to the U.S. Department of Justice and Federal Communications Commission’s blocking of a 2011 attempt by AT&T to acquire T-Mobile. However, as one of the two largest carriers in the country, AT&T may have posed larger antitrust concerns in the minds of federal authorities than No.3 Sprint would.
Wireless infrastructure firm formed
Two wireless industry veterans recently announced the formation of a new company focused on developing infrastructure for the nation’s carriers. Blue Sky Towers’ Tom Remillard and Jim Rech have more than 40 years of combined experience in the telecom industry, covering both wireless real estate and developing cell tower infrastructure. The pair have acquired approximately $80 million in financing from Peppertree Capital Management to fund their new venture. As the organization gets off the ground, it hopes to drive interest in its services by offering access to potential telecom real estate sites across 20 major markets, expediting the land leasing process.
“Our industry is experiencing a period of unprecedented growth of new site builds, driven by the surge of new applications and the popularity of these new products,” Remillard said. “We are extremely excited to be partnering with Peppertree Capital in this timely venture. We feel their depth of investment experience and direct knowledge of the cell tower business will be a huge asset to the success of Blue Sky.”
14 banks back Oi share plan
Several banks from across the globe have offered firm commitments to purchase a significant number of shares belonging to Brazilian telecom Groupo Oi SA. Reuters reported that as many as 14 financial institutions have agreed to buy approximately $2.5 billion in shares when Oi carries out a secondary share offering in April. According to the news outlet, this latest financial move by Oi is part of a larger plan to merge with Portugal Telecom. However, minority shareholders have criticized any such transaction, stating that it would unduly benefit larger investors.
According to Reuters’ anonymous sources, the financial institutions that have committed to purchasing future shares include Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Barclays Plc. However, those organizations have yet to confirm or deny any involvement in any proposed transaction.
Bouygues ups its bid for Vivendi
French telecom Bouygues SA recently opted to increase the amount of cash it was willing to offer to acquire competitor Vivendi SA. Bloomberg reported that the organization updated its proposal, allocating more capital to cash considerations for Vivendi. Bouygues added another approximately $1.1 billion in cash while reducing Vivendi’s stake in the resulting company from 46 percent to 43 percent. If approved, this latest proposal would give Bouygues a 52-percent majority holding in the corporation.
This latest development reflects the increasing trend of telecom consolidation in Europe and elsewhere, as industry members look to shore up their assets by merging with competitors.
