New Street Says T-Mobile/Sprint Now a Largely Done Deal

“The only risk to Sprint equity now would be if the deal were upended through an appeal, the Tunney Act review, or the [California Public Utilities Commission] process, all of which we consider unlikely,” New Street’s Jonathan Chaplin told investors. “Sprint stock is now a cheaper way to buy New T-Mobile, though we don’t expect many investors to have much of an opportunity to get Sprint at the discount implied by yesterday’s closing prices. Nevertheless, we upgrade Sprint to Buy, for the sake of consistency.” Sprint’s stock price was up 6% Friday to close at $10.05. MoffettNathanson’s Nick Del Deo said there remain unknowns for tower companies. “Is New T-Mobile going to stick to its plan, or end up retaining or decommissioning more sites than it has laid out?” he asked: “Is Dish [Network] going to aggressively build its network, or will it defer capex to the extent possible by relying on its wholesale deal with New T-Mobile? And how many sites will it build, and at what sort of rent?” Chairman Ajit Pai, meanwhile, assured Rep. David Cicilline, D-R.I., the FCC did a thorough review of the deal. “The Commission followed the standard administrative process,” Pai said in a letter posted Friday: “The Commission compiled a voluminous record following a series of public notices seeking public input on various aspects of the transaction. Commission staff conducted an exhaustive examination of the evidence, including review of hundreds of thousands of pages of pleadings, documents, and the substantial material filed by the Applicants and third parties in response to our information requests.”