Europe: AT&T's New Frontier

Players in the telecom industry know that the US wireless market has reached a saturation point. With market penetration exceeding 100%, the prospects for future growth are slim, especially with the Department of Justice (DOJ) intent on preventing major acquisitions in the industry.

As the possibilities for mergers and acquisitions within North America diminish, AT&T (T) has started looking for strategic acquisitions abroad. The company has already partnered with Latin American providers (it is a strategic partner and investor in Carlos Slim’s America Movil) and is also looking to expand its network to Central American countries.

More recently, AT&T has expressed interest in crossing the Atlantic and acquiring a European service provider. At a first glance, however, Europe seems to be an even more saturated market as compared to the US. The continent has 656 million individual subscribers, and a penetration rate of 128% according to GSMA, a wireless industry association. However, while Europe was the first adopter of 4G LTE technology, the US has surpassed it in the last few years. Recent figures provided by GSMA reveal that less than 2% of all Europeans use 4G LTE technology, compared to a little over 20% in the US. This is where AT&T believes the opportunity lies.

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Verizon Leads AT&T In Postpaid Smartphone Subscribers

Recent estimates by the Kantar Group, a market research and analytics firm, show that Verizon Communications Inc. (VZ) was leading wireless telecom companies in smartphone sales for the three months ending August 2013. According to Kantar’s estimates, Verizon sold almost 37% of all devices sold in the US market during that period, while its main competitor, AT&T Inc. (T), lost market share.

Changes in market shares of smartphone sales can have major implications for wireless carriers, who are operating in an already saturated market with limited growth options. Smartphones are the largest growth drivers for the wireless industry and their owners use more data and therefore have higher data ARPUs, which is the fastest growing revenue stream for the industry.

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Sprint Mulls Taking Over T-Mobile

The Wall Street Journal (WSJ) cited unnamed sources on Thursday, in a report claiming that Sprint Corporation (S) is potentially planning to bid for rival T-Mobile US, Inc. (TMUS).The price of T-Mobile stock, which is controlled by Deutsche Telekom AG out of Germany, jumped over 8.5% on the news, recording the largest single-day gain in more than a year.

A deal between the two companies would cap off a consolidation spree in the Telecom sector, which has seen the closure of many deals this year. T-Mobile and Deutsche Telekom’s acquisition of Metro PCS took place earlier this year. Sprint’s majority stake sale to SoftBank and Verizon Communications Inc.’s (VZ) 45% share repurchase from Vodafone Plc. also occurred this year.

The WSJ report, which was not confirmed by SoftBank, Sprint’s Japanese parent, goes on to say that the company could make a bid of around $20 billion sometime during the first half of 2014. Deutsche Telekom, which acquired a 74% shareholding in T-Mobile earlier in the year, has been open to the sale of its stake. This was indicated by the Deutsche CFO’s revelation of an exception clause, which allows the company to sell its entire T-Mobile stake in one go.

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Sprint Prepping for T-Mobile Acquisition, Stock Rallies

The telecom sector which sawquite a few deals throughout the year,has closed out the last full week of the year on the same note. Sprint Corp. which is owned by SoftBank of Japan is reportedly preparing for a bid on T-Mobile US in a deal that is being valued at around $20 billion. The offer, which according to reports could come as early as the spring of 2014, would be welcomed by T-Mobile’s parent company Deutsche Telekom AG, which has already shown interest in unloading its US wireless assets.

The deal if approved by the Department of Justice would make SoftBank the second largest telecom service provider in the world in terms of wireless revenues, after China Mobile (CHL). SoftBank Chief Executive Masayoshi Son however faces huge hurdles in getting the deal approved by US regulators who in the past have indicated a preference for an industry with four major carriers. A prior attempt by AT&T Inc. (T) has already been rejected by the antitrust regulators on the back of concerns regarding consumer choice.

Read More : S - TMUS - T

AT&T vs Verizon

The US telecom industry includes companies that provide telephony, cable and satellite television and internet services. The key players in this industry are: AT&T, Verizon Communications, Sprint Communications and T-Mobile US. AT&T has the largest share of the wireless subscriber market with 107 million to Verizon’s 98 million subscribers. However, Verizon leads in the postpaid wireless segment with 93 million subscribers.

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T-Mobile is Ruffling Feathers

T-Mobile US (TMUS) has been shaking up the telecom industry since its flamboyant CEO, John Legere, took over the reins in September 2012. He did so again at the Consumer Electronics Show (CES), sending his rivals tumbling.

He announced a double down on the company’s “un-carrier” strategy. While not taking a specific shot at AT&T Inc. (T), T-Mobile announced $650 in credit and incentives to users switching from any other wireless service. The company is offering $350 to cover early termination fees, along with $300 in device exchange for customers that sign up for a postpaid T-Mobile plan.

Legere’s presentation at CES on Wednesday night is causing the markets to react. The company’s three competitors AT&T, Verizon Communication Inc. (VZ), and Sprint Corporation (S) should be concerned. Stock prices for all three were down, with AT&T and Verizon being down a little over 2%, while Sprint stock declined over 5.5% yesterday.

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AT&T vs. T-Mobile – It’s On, It’s So On

It’s only natural for AT&T (T) and T-Mobile (TMUS) to be all up in each other’s face since both companies fiercely compete to capture more subscribers in an already saturated US telecom and wireless market.

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AT&T’s Sponsored Data Plan Grabs Attention of Consumers and Rights Groups

AT&T Inc. (T) announced the introduction of “sponsored data” on January 6 that will allow developers and other companies to deliver content to consumers on their mobile devices, over and above their data caps.

Data consumption has increased with growing use of smartphones and tablets, and over recent years, carriers have increasingly grappled with traffic congestion on their networks. Recent shifts towards 4G LTE have caused demand to sky rocket as content becomes increasingly mobile, driven by social media and on-the-go entertainment.

AT&T and Verizon Communications Inc. (VZ), the two biggest carriers in the country do not currently offer unlimited data usage on their networks. The two smaller rivals, Sprint Corp. (S) and T-Mobile US (TMUS) on the other hand, currently offer unlimited data plans over their networks but are limited in the number of markets they operate in.

Read More : T - S - VZ