Sprint Nextel Corporation (S)’s Big Deal Shakes Up the Telecom Sector

AT&T had flat revenues for 2012, totaling $32.6 billion, but brought in a record $39.2 billion in cash from operations. Its wireless and wireline segments both increased revenues 5.7% and 3%, respectively, year over year. Its operating expenses were lower year over year, at $38.5 billion. This shows that AT&T is well-positioned to deliver future solid results, and to make investments that further develop its network with its $14 billion in free cash flows.

Despite their financial strength, the DISH-Sprint deal could threaten both companies, as could moves by regulators to let smaller carriers access more spectrum and increase competition in the wireless market.

In Conclusion…

Although the DISH bid for Sprint Nextel Corporation (NYSE:S) would create a dangerously indebted company, it is an excellent opportunity for DISH to expand to the phone market and offer different services that could increase its revenues. Moreover, DISH’s satellite expertise and TV business give it competitive advantages in offering TV and other video capabilities to customers. The deal will face regulators’ scrutiny, but since it’ll improve competition in the wireless market, it’ll likely get a thumbs-up.

Verizon and AT&T are very big and healthy companies that should not worry about the Sprint Nextel Corporation (NYSE:S) deal. But the merger trends the US telecom industry is going through could substantially change some of the market players in the future years. Customers are more demanding, and if DISH can offer a multi-service bundle, it could conceivably woo more of those consumers away from its rivals.

The article Sprint’s Big Deal Shakes Up the Telecom Sector originally appeared on Fool.com and is written by Damian Illia.

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