Verizon Communications Inc. (VZ) Yes, AT&T Inc. (T) No? It’s About Spectrum!

Verizon Communications Inc. (NYSEVZ) has been very aggressive in building out its industry-leading 4G LTE network, and AT&T Inc. (NYSE:T) has been trying to keep up. However, both companies also realize hat the amount of wireless spectrum available has been shrinking rapidly. Both companies have attempted to grab more spectrum anywhere they can find it. And that is the underlying reason behind the deal that Verizon will likely get approved by the FTC soon, and the reason behind the deal that AT&T had taken away by the U.S. Department of Justice.

Verizon Communications Inc. (NYSE:VZ)It’s all about spectrum. AT&T Inc. (NYSE:T) initiated its attempt to conquer more spectrum space when it tried to purchase T-Mobile USA. The motives were true – it just wanted to have more spectrum space so it could expand out its new 4G network and reach more markets so it can compete with Verizon Communications Inc. (NYSE:VZ). The problem was the fact that AT&T tried to take out a direct competitor, and that lessened competition was what sent up red flags with the DOJ.

Verizon Communications Inc. (NYSE:VZ) had the same motive when it approached cable companies about a “marketing agreement,” which is supposed to be approved by the FCC after the DOJ instituted some amendments to the agreement. The initial agreement would have shut out the other wireless carriers from having similar agreements with cable companies, which would have reduced competition – again, a DOJ red flag. However, because that could be worked out fairly easily and this wasnt’ a purchase attempt by Verizon, Verizon is winning the race for more spectrum – at least at this point.

How this race will turn out is anyone’s guess, but those who are behind are at a disadvantage against Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T), which hold 70 percent of the wireless market combined. This is not unnoticed by wily investors in both companies, including hedge-fund managers like D.E. Shaw, who has $85 million invested in AT&T as of the end of June, and Ray Dalio, who has $19 million in Verizon stock in his Bridgewater Associates hedge fund.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!