AT&T Wireless, Sprint PCS, Rivals May Seek Mergers to Cut Costs
By Lisa Levenson
quote.bloomberg.com
New York, March 30 (Bloomberg) -- AT&T Wireless Services Inc., Sprint Corp.'s PCS Group and other U.S. mobile-telephone companies may seek merger partners to cut costs and lift profit amid slowing customer growth, investors and analysts said.
With almost 50 percent of Americans using cellular phones, carriers are reducing prices by as much as a third to lure subscribers. That's trimming revenue, delaying profitability and making it harder for money-losing companies to repay billions of dollars in debt they've taken on to upgrade networks.
Acquisitions might eliminate some smaller carriers, such as Deutsche Telekom AG's VoiceStream Wireless Corp., easing price competition and helping stem customer defections, investors said. A merger of rivals using the same transmission technology, such as Verizon Wireless Inc. and Sprint PCS, would help avoid duplicative spending to improve networks for new services.
``There are too many players, too much competition and not enough return on the capital to justify the amount of money that's been spent on upgrades,'' said Jim Lyon, a portfolio manager at Los Angeles-based Oakwood Capital Management, who's shunning wireless stocks. ``There's likely to be consolidation.'' |
