Friends in Unexpected Places
We've seen AT&T (NYS: T) running into one roadblock after another in its quest to merge with T-Mobile USA. It's one activist senator here, one DOJ lawsuit there, and vehement opposition from rivalsSprint Nextel (NYS: S) and Leap Wireless (NAS: LEAP) . And that was just what happened before breakfast.
So Ma Bell must be elated to see some support at long last. It's even more exciting when the backing comes from archrival Verizon (NYS: VZ) .
Speaking at the Communicopia conference Wednesday, Verizon CEO Lowell McAdam gave the AT&T-Mobile union his wholehearted blessing.
"The AT&T merger with T-Mobile is kind of like gravity, it had to occur," McAdam said. In his view, AT&T is desperate for more wireless spectrum while T-Mobile doesn't have the financial wherewithal to build networks for all the spectrum licenses it owns.
And like gravity, he also had to point out how the merger would help Verizon. "If you look at the path that wireless is on, clearly we need to have more spectrum in the marketplace," he said.
In other words, you gotta let AT&T swallow T-Mobile for its spectrum assets, because then we can complain about being spectrum-starved ourselves. Wireless licenses are like liquid gold in this business, and more is always better. Therefore, any excuse to petition the government for another spectrum auction or perhaps permission to buy up a bunch of smaller competitors is a great excuse.
After a speech like that, I get the distinct feeling that Verizon wants to buy network-compatible rival Sprint or spectrum-drenched Clearwire (NAS: CLWR) , or perhaps both. If the AT&T deal were allowed, this would be the next logical step for our wireless industry. And then we're half a step away from putting Humpty "Ma Bell" Dumpty back together again. I guess the king is looking for more horses and stronger men.
I believe that the merger is poised for spectacular failure, but it ain't over till it's over. You should keep a close eye on this industry, Fool:
- Add Verizon Communications to My Watchlist.
- Add AT&T to My Watchlist.
- Add Sprint Nextel to My Watchlist.
- Add Leap Wireless International to My Watchlist.
- Add Clearwire to My Watchlist.
At the time this article was published Fool contributor Anders Bylund holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.