CPUC to Review AT&T&T Proposed Merger

The California Public Utilities Commission will launch an investigation into the pending AT&T/T-Mobile merger.

AT&T&T LogoThe Commission, which is now populated by a majority of members appointed by Gov. Jerry Brown, will evaluate whether to propose conditions on the merger.  The Commission will be taking public testimony, and moving its review along a fast track which may result in a Commission action in October of this year.

Here are two links with additional information on the pending CPUC review:

The Los Angeles Times article: http://latimes.com/business/la-fi-puc-att-20110609,0,2964962.story

The CPUC Press Release: http://docs.cpuc.ca.gov/word_pdf/NEWS_RELEASE/136944.pdf

 

 

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AT&T&T Likely to Have to Divest Portions of Networks

Reuters is reporting that AT&T CEO Randall Stephenson believes that his company will have to divest portions of its existing wireless network to secure federal permissions to acquire T-Mobile.  Stephenson’s comments were made in New York at a Council on Foreign Relations event held on March 30, 2011

My suspicion is that T-Mobile will be similarly required to divest portions of its existing wireless network in the same or adjoining areas as those assets that AT&T will shed to make the deal work for the Feds.

The shed assets will help strengthen the remaining, small competitors, who will then become known as current take-over targets for other major players.

Stephenson also said at the same event that he expected consumer prices for wireless services to continue drop as a result of the proposed merger.  His comments came just hours before April Fools Day.

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AT&T&T?

It’s no surprise that T-Mobile will soon cease to exist in the U.S.  What is a surprise is that AT&T is claiming the prize, rather than the widely-rumored suitor, Sprint/Nextel.

What is more of a surprise is that T-Mobile lasted so long before giving up the ship. T-Mobile has always played a game of the catch-up wanna-be to the legacy national carriers in the U.S. 

What does make sense is that AT&T, rather than Sprint/Nextel looks like the winner: Sprint/Nextel certainly needs access to more sites and licenses, but AT&T can make better use of T-Mobile’s assets, specifically the AWS-Band frequency assignments around 2100 MHz.

AT&T went the other direction when it focused, rightly, on gaining new 700 MHz frequencies for its LTE data (and later, voice) deployments.  By taking T-Mobile, AT&T gains more spectrum in the 1900 and 2100 MHz bands to add to its existing 700 and 860 MHz assignments.  Sweet.  AT&T’s recent purchase of the national 700 MHz band license from the ill-conceived and now all-but-defunct MediaFLO/FLO-TV operation of Qualcomm makes even more sense given the pending marriage with T-Mobile.  Sweeter.

Sprint could not have benefited to the same degree as AT&T given that it does not have 860 MHz band assignments (yes, I’m discounting the Nextel assignments for this discussion since those have turned out to be such a poor deal for Sprint).

IF THIS DEAL GOES THROUGH, and there’s certainly a big IF in there, I suspect that the even-newer AT&T will be forced by the DOJ/FTC/FCC to sell off chunks of the existing networks of both firms.  This has been the trend in prior mergers/buy-outs, and it’s unlikely that this deal will not see sales of major network assets in the name of competition.

What’s next?

For site landlords, in about a year it will be time to take out their AT&T and T-Mobile lease contracts and look at those transfer terms.  It’ll be a really interesting time for site lessors with both AT&T and T-Mobile currently collocating at the same site.

For other wireless carriers, this deal will force some shotgun marriages. 

I predict that Sprint/Nextel will now look to MetroPCS.  Verizon will look at MetroPCS, too.  This may also be the start of the end-game for Cricket Wireless.

Finally, many of the roaming contracts between the biggies and the smaller regional PCS and cellular carriers contain buy-out options (the biggie can for the sale of the small fish).  We’ll see Verizon continue its aggressive campaign of Roam-to-Buy as a first step of blunting the AT&T/T-Mobile deal.

For now I think we should start calling the new network: “AT&T&T”!

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Clearwire to Present at Citi 21st Annual Global Entertainment, Media & Telecommunications Conference

Clearwire’s CFO will, no doubt, have some important things to say about Clearwire’s UNCLEAR financial future when he presents next week at Citi’s 21st Annual Global Entertainment, Media & Telecommunications Conference. Details below are from Clearwire’s press release.  I’ll bet Sprint’s investment and finance people will be very interested in what’s said!

Clearwire to Present at Citi 21st Annual Global Entertainment, Media & Telecommunications Conference
KIRKLAND, Wash., Dec 30, 2010 (GlobeNewswire via COMTEX) —

Clearwire (NASDAQ: CLWR) today announced that its Chief Financial Officer, Erik Prusch, will speak at the Citi 21st Annual Global Entertainment, Media & Telecommunications Conference in Scottsdale, Arizona, at 5:05 p.m. MT on January 4, 2011.

Interested parties are invited to register in advance at http://investors.clearwire.com/ in order to listen to the live audio webcast presentation. A replay will be available one hour following the event until April 6, 2011.

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No Clear Path for Clearwire

Clearwire is undergoing a capital squeeze that may leave it unable to continue as an ongoing business.  The issues that face the company are clearly set out in its most current SEC 10Q report (dated 11/4/10), which contains this passage:

Liquidity Issues

We are at an early stage of implementing our business strategy. Since formation, we have invested significantly in our business and experienced substantial losses from operations and negative cash flows. During the first nine months of fiscal 2010, we incurred $1.55 billion of net losses. We utilized $840.8 million of cash in operating activities and spent $1.96 billion for capital expenditures in the development of our network. We do not expect our operations to generate positive cash flows during the next twelve months.

As of September 30, 2010, we had available cash and short−term investments of approximately $1.38 billion. Based on our current projections, we do not expect our available cash and short−term investments to be sufficient to cover our estimated liquidity needs for the next twelve months. Without additional financing sources, we forecast that our cash and short−term investments would be depleted as early as the middle of 2011. Thus, we will be required to raise additional capital in the near−term in order to continue operations. Further, we also need to raise substantial additional capital over the long−term to fully implement our business plans.

We are actively pursuing various initiatives aimed at resolving our need for additional capital. We are in discussions with a number of our major shareholders and other third parties about a number of options, including  potential strategic transactions, additional debt or equity financings and/or asset sales. A special committee of our Board of Directors has  been formed to explore strategic alternatives, including transactions that may involve a sale or other realignment of the ownership and governance of our company.  Additionally, at the same time, we are holding discussions with various parties with respect to securing additional  financing. Any financing transaction would likely include selling additional equity or debt securities issued by us or our domestic or international subsidiaries. Any additional debt financing would increase our future financial commitments, while any additional equity financing would be dilutive to our stockholders. Our ability to raise sufficient additional capital in the near and long−term on acceptable terms, or at all, remains uncertain. Lastly, we believe that the fair market value of our spectrum portfolio exceeds our outstanding liabilities and that a portion of our spectrum is not essential to our business. Thus, we have initiated a process whereby we are seeking bids to potentially sell the excess  spectrum assets to raise additional funds to continue to operate.  However, the process is at an early stage, and there can be no assurance that we will be able to sell a sufficient
amount of spectrum on terms acceptable to us.

We are also actively pursuing a number of initiatives intended to reduce costs and conserve cash, including: suspending development activities for sites not required for our current build plan; delaying the launch of new end user devices such as Clear branded smartphones; substantially reducing sales and marketing spending; making reductions to discretionary capital projects; substantially reducing the number of contingent workers and reducing our employee numbers by approximately 15%. We currently have thousands of sites in various stages of planning and construction beyond our current build
plan, and we intend to suspend zoning and planning in a portion of those sites. These contemplated initiatives are intended to result in potential cost savings of between $100 million to $200 million in 2010 and again in the first half of 2011. However, we may not realize the full amount of savings we expect as a result of these initiatives. Even if these initiatives do result in the anticipated cost savings, we will still be required to obtain sufficient additional capital.

Our ability to continue to operate our business is substantially dependent on our ability to raise additional capital in the near term. As discussed above, we are actively pursuing a number of possible funding options, but there can be no assurance that these efforts will be successful. Our expected continued losses from operations and the uncertainty about our ability to obtain sufficient additional capital raise substantial doubt about our ability to continue as a going concern.

Clearwire’s next steps are outlined, but it is far from clear that this technology firm will continue in business, or continue as it currently exists.

The impact on Clearwire site landlords cannot be overstated.  If Clearwire goes into bankruptcy, site landlords without specific lease protections may find themselves out of rent, and out of luck for months or years, any may only collect a percentage of rent due, if any.

These are trying times for Clearwire; hopefully the firm will survive and provided needed competition in the wireless arena.

If you would like to read the entire 10Q report, you can do so by clicking here:  Clearwire Corporation’s SEC 10Q Report dated 11-04-2010 (PDF format).

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Site Landlords: Does Clearwire or Clear Wireless Want On to Your Site?

In various markets in California, Clearwire (sometimes Clear Wireless LLC) is seeking tower site landlord authorization to add to an existing site.  Sometimes the applications or lease amendments are tendered by Sprint (which owns 51% of the legally-separate Clearwire entity), but I’ve also seen other wireless carriers ask permission to sublease their tower space to Clearwire without offering any financial benefit to the tower site owner.  Sometimes the tenant will tell the landlord that some provision of the lease requires the landlord to give permission (seems odd and in conflict doesn’t it… a lease requirement that the landlord must give a permission).

Before you sign on the dotted line, it’s worth pulling our your original lease (and any amendments you’ve signed) to see whether adding Clearwire (or any new proposed site occupant) is permitted or required under the lease, or whether this is an opportunity for you to adjust your site revenue upwards to reflect the new addition, and ‘true-up’ other open items connected with your tower lease.

Be especially careful if your wireless carrier tenant approaches you for permission to sublease to another wireless firm AND asks for a rent reduction at the same time.   Talk about galling!

I’ve had site landlords approach me recently who find themselves in one or more of the ugly positions I’ve just listed.  If you’d like legal assistance to avoid giving away potential new revenue, and to avoid giving away your current revenue, drop me an electronic note or give me a call.

Jonathan Kramer, Esq.
Kramer Telecom Law Firm, PC
Los Angeles

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Sprint Nextel to release 4Q08 Results on 2/19/09

colorsprintlogo1OVERLAND PARK, Kan., Feb 06, 2009 (BUSINESS WIRE) — Sprint Nextel Corp. (NYSE:S) will release its financial results for the fourth quarter of 2008 on Thursday, Feb. 19. The results will be posted at www.sprint.com/investors at approximately 7 a.m. EST. Sprint Nextel management will host a conference call at 8 a.m. EST to discuss the results.

Sprint Nextel Conference Call Information
Date:                   Thursday, Feb. 19, 2009
Time:                 8 a.m. EST
Call-in Numbers:  Toll free: 866-763-0020 (US/Canada) –
ID Required: 83732306

International: 706-902-1194 – ID Required: 83732306

Please plan on gaining access 10 minutes prior to the start of the call.

A simultaneous webcast will be available at www.sprint.com/investors. Please note that questions may only be submitted through the conference call option. Replays of the conference call will be available shortly afterward by calling 800-642-1687, and entering the code: 83732306.

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Sprint Nextel Schedules 4Q08 Earnings Announcement

OVERLAND PARK, Kan.–(BUSINESS WIRE)–Jan. 6, 2009–Sprint Nextel Corp. (NYSE: S) will release its financial results for the fourth quarter of 2008 on Friday, Feb. 27. The results will be posted at www.sprint.com/investors at approximately 7 a.m. EST. Sprint Nextel management will host a conference call at 8 a.m. EST to discuss the results, and details for accessing that conference call and replays will be made available two weeks in advance.

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