Macquarie Capital: Dump Verizon, If Dish Network And T-Mobile Merger Goes Through

The Wall Street Journal recently reported that DISH Network Corp DISH is in talks with T-Mobile US Inc TMUS for a possible merger, following which shares of both the companies opened strong on Thursday and were trading higher.

 

Kevin Smithen, Macquarie Capital analyst, was on CNBC to weigh in on this and to discuss why according to him Verizon Communications Inc. VZ becomes a sell, if this deal goes through.

 

Stock Already Pricing IN The Transaction

 

“Deutsche Telekom holds about 67% of the company and they have been quite active in talking about potential long-term exit for themselves, really since the Sprint deal fell apart,” Smithen said. “So, Deutsche Telekom may have more longer term this isn’t a strategic asset. They have talked about wanting to exit the U.S., recommitting the capital to the European market.”

 

He continued, “And so, they could sellout at a price and their perceived value that is lower than what some of the minority shareholders maybe expecting. And we think that price could be in the low to mid-40s and we expect a long 12 to 18 month regulatory review here in a primary deal and so we think the stock today at around $40 as the last sale is already pricing in a transaction which has yet to be announced.”

 

Sell Verizon

 

On why he thinks investors should sell Verizon if this deal goes through, Smithen said, “Verizon, we think, is boxed into a corner here. They have sold their fixed-line asset to frontier or some of that. There are reports out that they are in discussions to sell the remaining […] wireline assets to Altice. And, we think, Verizon is lacking a converge network strategy.”

Posted In: CNBCMedia

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.