FCC Review of Wireless Deals Likely Not Slowed Too Much by Federal Shutdown
The federal government shutdown slowed the regulatory review of two major wireless transactions -- Verizon’s bid to buy Vodafone’s 45 percent of Verizon Wireless for $130 billion and AT&T’s $1.2 billion bid for Leap Wireless -- but in the end likely won’t prove a major hurdle, industry officials said this week. Verizon/Vodafone is the biggest telecom deal in U.S. history.
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The FCC paused the 180-day shot clock on all pending transactions by 16 days, the length of the shutdown, but has tried to keep the deals on track, industry observers told us. For example, comments were to be due last Friday on the foreign ownership implications of the Verizon/Vodafone transaction. Rather than impose a 16-day delay, comments are now due this Friday, replies Nov. 1.
AT&T/Leap has already been controversial, with Public Knowledge and others filing petitions to deny Sept. 27, before the shutdown (CD Sept 30 p8). Oppositions were due Oct. 7, but pushed forward 16 days with other filings when the FCC reopened. AT&T was expected to file its response to the objections late Wednesday. In an unrelated development, Leap said Wednesday stockholders will be asked to ratify the deal Oct. 30, rather than Thursday, as the company makes updated filings at the SEC (http://bit.ly/1eJNQli) to address “a classification error in the presentation of certain capital expenditures in the consolidated statements of cash flows.” AT&T still expects to close the deal in the first quarter of next year, Chief Financial Officer John Stephens said on a call with investors Wednesday.
Telecom lawyers expressed some concerns about the shutdown’s effect on both transactions last week. But the same lawyers said this week since the shutdown ended after 16 days, it should not be a huge problem for either company. “The schedule that the commission has decided ... is going to be fine,” said a lawyer who represents carriers among other clients.
"I expect that there is probably some modest slow down the same as with everything else,” said Public Knowledge Senior Vice President Harold Feld. “As the FCC clears its backlog and gets back up to speed, the delay will become less of a factor. For Verizon/Vodafone in particular, the issue seems a fairly straight up policy issue, so we would expect little delay. By contrast, AT&T/Leap involves a number of markets where the spectrum screen is triggered, which requires more staff resources to look at potential effects in those markets."
"The Wireless Bureau has an incredibly full plate, so the shutdown might push everything back just a bit,” said Paul Gallant, analyst at Guggenheim. “But in the big picture, these deals aren’t highly controversial and the commission probably will still get them done pretty close to their original targets."
Some delays are inevitable, said Jeff Silva, analyst at Medley Global Advisors. “As a technical matter, yes, work on pending transactions was interrupted, so delays are indeed possible,” he said. “But in the grand scheme of things, any delay in FCC action on pending transactions caused by the government shutdown should not be substantial all things being equal. Delays could be more pronounced if combined with transaction review snags that require closer regulatory examination and negotiations between the FCC and parties to the deals. Perspective is important. Companies with mergers/acquisitions before the US government are highly sensitive to any regulatory delay because of potential, ripple-effect complications to business planning, strategizing and accounting."