Mergers & acquisitions

M&A in the USA

Keeping up with the changing, consolidating, spectrum-hungry U.S. wireless market is no small task. You've got Dish duking it out with Softbank to acquire Sprint, which wants to buy out the half of Clearwire it doesn't already own, if Dish or Verizon doesn't beat it to it. Then, there's T-Mobile, which was all set to acquire MetroPCS until shareholders demanded it sweeten the deal. The market is rapidly consolidating as the big get bigger and the small join forces. M&A in the U.S. might be far from over, too, according to Analysys Mason. The analyst firm recently put out a useful chart (see below) on the current state of M&A in the U.S., including some predictions on what's to come. The firm believes the regional operator Leap Wireless is a prime candidate for further consolidation and that, if Softbank wins Sprint, a potential merger with the T-Mobile/MetroPCS duo could be a possibility.

The chain of U.S. wireless mergers. Numbers next to operator names indicate rank according to number of active subscribers as of 4Q'12. Source: Analysys Mason.
So, what's the reason for this flurry of M&A activity in the U.S.? It all comes back to spectrum, according to Analysys Mason Senior Manager Philip Bates. "Spectrum policy in the USA has led to an imbalance of spectrum assets among the mobile operators and created a marketplace for operator-to-operator transactions," Bates writes in a research note. As the operators try to catch up to Verizon in the race toward LTE, they're in a constant battle for more spectrum and strength in numbers. The market seems to be bifurcating between the big, powerful players and the low-cost alternative operators, with the middle-of-the-road operators getting squeezed somewhere in the middle. In this muddle, Bates says Clearwire could be the potential game changer for one of its deep-pocketed suitors, either Softbank or Verizon, given its 2.5GHz spectrum holdings that could be used to launch "an extremely high-speed (200Mbit/s) mobile broadband network in built-up areas – a kind of turbocharged Wi-Fi based on licensed spectrum." For more
— Sarah Reedy, Senior Editor, Light Reading

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