Sunday, March 20, 2011

AT&T acquires T-Mobile USA, but what about Sprint?

Verizon (^VZ) is going to have some serious competition with this take over of T-Mobile USA by AT&T (^T) for $39 billion. Question is, what's going to happen with the already struggling Sprint? (^S). Some major shifts in the telecommunication landscape is bound to happen. I'm curious to see if Sprint will even survive. Their stock broke though the $5 a share resistance level recently but that's nowhere near the giants Verizon that's around $35 or AT&T that's trading around $27 a share.

Cheap stocks are cheap for a reason.

And that's too bad, because I like Sprint. I really do. They had some trouble in the past with their network but they have significantly improved. But is it too late? With this acquisition of T-Mobile USA by AT&T it will become the largest telecommunications operator in the US. Some serious competition for Verizon.

But when AT&T and Verizon duke it out on the telecom battlefield, will that leave Sprint in the dust?

Before you short Sprint like a madman, consider the fact that Sprint is in possible merger talks with Deutsche Telekom, however its contract value is nowhere near the merger between AT&T and T-Mobile USA.

There's a few things that can happen in this scenario and I'll address what I think are the most likely ones in the next few months;

A: Sprint's stock will tank and soon be trading below the $3 mark.

B: Sprint's stock will be trading sideways; investors are cautious to see if the biggest telecom giant in the US will live up to its obligation.

C: Sprint's stock will rise dramatically in price, now that T-Mobile USA is out of the picture, that less competition for Sprint, now they pretty much only have to focus on how to tackle down just one other major player in the field.

Which one will it be? Leave comments.

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