Gabelli Says Sprint Nextel is the Loser In the AT&T / T-Mobile USA Deal

In a report published by Gabelli, with AT&T and Deutsche Telekom considered main winners in the proposed AT&T's acquisition of T-Mobile USA, Sprint Nextel S was yesterday viewed by investors as a consensus “loser” from this deal, with the stock declining $0.69 or 13.6% on Monday. Gabelli said that it believes that although this transaction is a short-term negative for Sprint as it loses a potential strategic partner, the company could benefit in the long-term from a more rational pricing environment and an opportunity to clearly establish itself as a “value” player, potentially expanding that niche through acquisitions of unlimited prepaid carriers. “If the AT&T does not receive regulatory approvals, Sprint will likely be well-positioned to merge with T-Mobile USA in a transaction that will establish a stronger #3 player. S is trading at 4.7x 2011E and 4.3x 2012P EBITDA. Our 2011 PMV estimate is $6.” Sprint Nextel closed yesterday at $4.36.