Gabelli Comments On AT&T's Acquisition Of T-Mobile

In a report published by Gabelli, AT&T's T acquisition of T-Mobile USA makes a lot of strategic and financial sense. Gabelli said that it should enhance its spectrum and network position, improve business mix, generate significant synergies, and could lead to more rational pricing environment. “Transaction is expected to close in ~12 months. It is subject to customary regulatory (including DOJ and FCC) and closing conditions. Obtaining regulatory approvals could be challenging for AT&T, as the combined company will have ~129 mm wireless subscribers (~42% market share) and a large spectrum position. T is trading at 4.8x 2012P EBITDA and 11.3x 2012P EPS. Our 2011 estimated sum-of-parts valuation is $38 per share, growing to $40 in 2012.” AT&T closed yesterday at $42.30.