Benchmark Capital Comments On AT&T, T-Mobile Acquisition

AT&T T and T-Mobile run the same network technology so network consolidation is feasible. AT&T may remove cell sites on towers where both AT&T and T-Mobile have equipment. The percentage of rental revenue at risk due to possible site decommissioning for American Tower AMT, Crown castle CCI and SBA is 4%, 6% and 7% with average remaining lease terms of 5, 7 and 3 years. Longer-term, fewer networks could lessen demand for towers and reduce tower pricing power. But overall network usage is the primary driver of demand for tower space. This acquisition will not impact growing consumer demand for wireless. AT&T believes volume will grow 8x-10x over the next 5 years. The inevitable next step is Verizon VZ buying Sprint. If AT&T's acquisition is approved, Benchmark thinks there is almost no chance a Verizon/Sprint merger is permitted. As such, it believes Verizon should bring that combination to the Department of Justice before it renders a decision on AT&T/T-Mobile. This would reduce the likelihood that AT&T wins regulatory approval. Sprint S may have an increased sense of urgency on 4G and scale. If Sprint further funds Clearwire, it would be positive for towers as it would restart Clearwire's network build. Sprint might also consider growing through acquisition. T closed Monday at $28.26