The wireless communications market these days can largely be summed up by one deal — the $39 billion merger between AT&T (T) and T-Mobile, a unit of Deutsche Telecom.
If you haven't bought into this deal — or sold out of it — there are other stock plays out there, so wait on this one.
For one, AT&T was recently downgraded by Zacks Investment Research to underperform from neutral.
The stock has already been trading at a 52-week high, and with the merger coming up, investors should wait on the sidelines for now.
Big mergers such as the one with T-Mobile should increase revenues and cut costs, but these things take time, especially deals of this magnitude, and such synergies don't become realities overnight.
"The merger would create a duopoly market for U.S. wireless services. It would further alleviate competition making AT&T and Verizon Communications (VZ) the two dominant players in the industry that control almost 80 percent of the U.S. wireless post-paid market," Zacks says. "The proposed merger has also raised worries for the telecom industry, especially Sprint Nextel Corp. (S)."
Sprint, meanwhile, is gearing up to battle giants AT&T and Verizon.
The company is renewing subscriber contracts and rolling out more and more smartphones, which will keep it competitive.
Verizon shouldn’t find itself totally eclipsed by the deal. Consumers have selected Verizon Wireless as Mobile Networks Brand of the Year, according to a 2011 Harris Poll EquiTrend study.
Verizon Wireless was ranked the highest in the study ahead of archrival AT&T for the second year in a row, Harris Interactive found.
"Since the change in the portability of phone numbers, switching mobile phones and mobile networks is significantly easier," Jeni Lee Chapman, executive vice president of brand and communications consulting with Harris Interactive, says in the statement.
"Verizon's strong brand equity can have a large impact when consumers have a choice."
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