Analysts at investment firm Legg Mason
said Tuesday any Verizon
plan to acquire Sprint
would face a
“significant” hurdle from government regulators.
Legg Mason released the report to investors in the wake of a Wall Street
Journal report that Vodafone — Verizon’s joint venture
partner in Verizon Wireless — would support any Sprint buyout plan.
“While we believe such a combination would yield synergies enabling Verizon
to pay a premium from current levels, a deal is unnecessary for Verizon’s
continued wireless success,” the report stated. “It would face significantly greater risk that
the deal would be blocked by the government than the risk that a
Sprint/Nextel deal would be blocked by the government,” the Legg Mason
Sprint is rumored to be in merger talks
news reports suggest an announcement could be made on the deal as early as
tomorrow. A Verizon buyout of Sprint then, according to the report, would hurt both Sprint and Nextel.
Nextel would be left without a partner and face a network-wide,
multi-million dollar upgrade on its own.
“If the government were ultimately to say no to a Verizon/Sprint deal,
Verizon could benefit from the relative weakness of Sprint and
Nextel during that period and in particular, a delay in those two companies
being able to develop a stronger wireless data offering,” the report states.
Verizon Wireless used to be the dominant carrier in the United States until its
competitor, Cingular Wireless — a joint venture
between Bell South
AT&T Wireless for $41 billion
earlier this year.
Verizon Wireless officials were unavailable for comment at press time.