The telecommunications industry is bustling with activity. Sprint and T-Mobile’s stock prices are making great strides as insiders are predicting consolidation in the near future and a merger that could create a real competitor to AT&T and Verizon. Verizon is offering unlimited with enticing prices to retain and capture any new customers and on Monday AT&T undercut Verizon’s unlimited deal with a similar offering at a cheaper price. SoftBank is making huge investments in the U.S. and it is likely Sprint in some way or form will change fundamentally. Additionally, SoftBank is in talks to invest over $3 billion in WeWork which is another product of the sharing economy. WeWork offers what they market as workplaces, or offices, for startups and small businesses.
According to RootMetrics Verizon beats all competitors in wireless performance followed by AT&T, Sprint, then T-Mobile. AT&T remains the largest telecom company by market capitalization at over $250 billion compared to Verizon’s over $200 billion. Both companies are looking to expand by becoming content providers. Verizon acquired AOL and recently Yahoo in efforts to increase their online video advertising revenues and to grow their digital footprint. (The Verizon-Yahoo deal was revised and lowered Yahoo’s valuation by about $300 million). Currently Google and Facebook receive 55% of online advertising sales, and it is a big market that could still be penetrated by big enough players with the right social capital and infrastructure.
Sprint’s stock has seen an impressive gain rising 167% in the past year compared to T-Mobile’s 65%. Even with extreme high volatility in the past couple of months, Sprint’s risk is increasing as reflected by the premiums on its options chains.
Looking forward private equity giants are sure to win from deals on M&A with a lot of changing leaders in several industries from telecom to healthcare.