UPDATE: Oppenheimer Downgrades MetroPCS Communications to Underperform on Deal Expectations
Oppenheimer reduced its rating on MetroPCS Communications (NYSE: PCS) from Perform to Underperform.
Oppenheimer noted, "We expect the five smaller wireless carriers to merge into one company. Most industries reach three players over time, which is a reasonable scale/choice/competitive mix. The likely path to this is for Sprint to acquire LEAP, then merge with the combined PCS/T-Mobile within two years. CLWR will be last in the process. We are… downgrading PCS to Underperform in view of these expectations. We believe T-Mobile acquired PCS for its spectrum (enables 20x20 LTE though with limited geographic coverage), and to gain a public currency and more coverage, and would like to have LEAP's spectrum also. Sprint has a major incentive to acquire LEAP before T-Mobile does, as it will be at a network advantage and may have a tough time negotiating a favorable merger with T-Mobile without it."
MetroPCS Communications closed at $12.04 on Wednesday.
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