Wireless telecommunications companies’ maneuvering in October 2012 sparked interest in whether those moves present investment opportunities.
Japan’s third-largest mobile carrier, Softbank, says it intends to buy a 70 percent stake in Sprint Nextel. Further, U.S. regional wireless service MetroPCS proposed a merger with T-Mobile that would create the third-largest wireless operator in the United States. Michael Hodel, who is a telecommunications analyst for Morningstar, said these deals would allow wireless carriers to compete more effectively with industry leaders AT&T and Verizon.
Hodel believes that the Softbank-Sprint deal should produce a much better competitor over the long term, despite the possibility of unforeseen challenges. The deal makes Sprint (NYSE: S; Price: $5.49) a more attractive stock than that of other wireless carriers, he says.