With the Q2 results reported for ALU, the rumors are out again on the potential sale of the unit, given the continued restructuring of the company under the SHIFT plan. The underseas cable group is potentially on the IPO path for 1H2015. But the company lost 885m EUR on a pro forma basis. So we expect the usual bidders such as Samsung and Nokia to be circling around. The Chinese vendors are shut out and we doubt Ericsson is interested but who knows? The price will be the key sticking point and certainly and labor issues revolving around employees in Europe (France).
Well, the two previous attempts to auction off licenses were a disaster and embarrassment to the TRAI and Indian government due in part to the absurd reserve prices. This was after they cancelled all of the GSM 1800MHZ licenses back in 2010 and screwed over many operators. Let’s face it, the Indian wireless landscape has been toxic for the past four years to the point where every time an auction is announced, it is similar to the boy who cried wolf! Will it be real this time? Or just another head fake. The entrance of Reliance Jio could shake things up relative to the incumbent license holders and would certainly drive up the prices as they would likely supplement their existing Band 40 2300MHz spectrum with 900MHz and 1800MHz licenses in key circles if not across all of India.
Back in 2007 , AT&T Wireless spent $2.5 billion buying 700MHz licenses from Aloha Partners I LP. Now fast forward to 2014 and AT&T Wireless is again going back to Aloha Partners, this time with the second fund named Aloha Partners II for AWS spectrum. The business model seems to have worked out well for Aloha Partners as I cannot imagine AT&T paying less than $500 million for these licenses by using a $0.95/MHz/POP rate for AWS. Coupled with spectrum purchases for T-Mobile from US Cellular and the more recent T-Mobile/Verizon Wireless spectrum swap, things are looking good for wireless equipment suppliers and the supply chain.
The stock ticker on the NYSE would be (FU) while on NASDAQ it would be (FUBR).
Over the past several days, there have been articles from various news outlets citing people familiar with the situation that the two companies have been in talks as about potential business synergies.
History tells us that multinational companies with distinct cultural differences can not work with each other. The American-French disaster that created Alcatel-Lucent is one example and the Finnish-German disaster that created Nokia Siemens Networks is the other.
One has to also consider who is still left at Alcatel-Lucent that didn’t ALREADY LEAVE during the past 12-18 months as the company was hemmorhaging financially, either willinginly or unwillingly.
Second, the wireless product portfolios of the two companies are completely different so does the new company discontinue the weaker product line (ALU) in favor of the stronger product line (NSN). light Radio does not fit with Liquid Radio.
Third, the cultural issues remain. Do the Finns fire and replace the Americans/French that remain at ALU?
Fourth, NSN just emerged from finally getting its house in order. Are the BoD members at NSN as stupid as the BoD members at NOK to not understand the massive risks a second merger would create?
Fifth, yes NSN desperately needs to increase share in the United States and this is the only way it can do it as organically, it has failed.
Sixth, yes it would allow a larger share of the China Mobile contract for TD-LTE with a combined share of ~15-17%.
Seventh, it would take 2-3 years to consolidate and merge the supply chain of the two companies as ALU has traditionally outsourced its RF designs.
Do these talks spur Samsung Electronics to either make a bid to bump up the price for NSN or actually consider it as a strategic move to block NSN and grow its footprint which organically, has been very very slow.
Bottom line is investors may be potentially happy because they are stupid. They do not have any idea on the non-synergies of the two companies. Any stock analyst out there with at least 2 neurons firing in their brain should be able to see this. If they don’t, then shame on them.
Blackberry puked before the close today sending shares down 20% after trading resumed when it reported it would miss the quarter by 50% in revenues, lay off 40% of its workforce and focus on the Enterprise segment. At this point, given the potential buyers, one has to wonder what is this company really worth? The phone business is bleeding and no one is buying Blackberry devices anymore so would any intelligent buyer keep the handset business going? Also on the Enterprise side, the company just foreshadowed a potential demise to its Enterprise business which is probably sending all IT guys scrambling to see which system they can convert over to and away from Blackberry. Any serious Enterprise user needs to have a backup plan now. The only potential value is in the IP patents.
This company has Nortel 2.0 written all over it.
The FCC has set a date for Jan 14 2014 for its next auction. This one is for the PCS H block 2x 5MHz (1915-1920MHz and 1995-2000MHz) spectrum. The reserve price is USD $1.56 billion or $0.50/MHz-POP metric. There are 176 EAG licenses up for grabs
The obvious choice to bid on this spectrum is Sprint given they own the G Block license which is adjacent to the H Block. But given the thorn in their side recently regarding Clearwire, DISH Network could be a likely bidder as would any remaining Sprint affiliates operating in the PCS spectrum.
The stakes are high for Sprint as it has deployed LTE in the G block but realistically, a 5 MHz LTE network is pretty useless. Acquiring enough licenses in the H Block would give Sprint 10MHz in key markets to really deploy a competitive network to T-Mobile, AT&T and Verizon. Other potential bidders could use this band along with 700MHz spectrum and LTE-A technology to increase overall network speeds.
There is always the blocking strategy to acquire the spectrum to block Sprint out in key markets that AT&T and Verizon could employ but it is worth the money to them to do this? Unknown but building out a new network to support H Block will not be cheap.
For the RF component suppliers, this means more RRHs!
I look forward to the actual band designation from 3GPP to be defined for the H Block.
In yet another crazy story within the soap opera of Harbinger Capital’s failed LightSquared strategy, the company is suing the GPS industry for $1.9 billion in damages saying it never would have made the investments (in LightSquared) if the GPS industry had disclosed potential interference problems between the LightSquared spectrum and GPS equipment between 2002 and 2009. This continues to show how much of an complete idiot Falcone is with regards to the due diligence his company DIDN’T do before their investment into forming LightSquared. Any RF engineer would have highlighted the potential issue of placing a sizable terrestrial transmitter right next to the receiver band for GPS. We expect Falcone will come up empty on this one but his lawyers will continue to be very very rich.