Market Scan Dobson Could Call In A Sale Joshua Lipton, 06.25.07, 12:30 PM ET There have been a lot of headline-grabbing deals going down in the telecom sector recently. On Monday morning news rushed through Wall Street of another such potential transaction, involving Dobson Communications. Dobson shares skyrocketed in morning trading as reports circulated the Street that the cell phone services provider was mulling over the idea of selling itself. According to the Wall Street Journal, the company has now hired investment banking powerhouse Morgan Stanley (nyse: MS - news - people )to consider all options, including a sale. At least one professional stock-watcher thinks such a sale could happen. Thomas Lee, analyst at JPMorgan, told clients he thinks such a sale is a strong possibility because Dobson (nasdaq: DCEL - news - people ) is, he wrote, a "key player" in deploying 700 megahertz range coverage in rural areas. "Therefore, we expect investors to view this news as positive for DCEL and other rural stocks," Lee wrote. Lee argued that Dobson is strategic to both the GSM carriers such as T-Mobile and Cingular as well as to rural cellular players. Lee said that he therefore expects "solid" interest in Dobson, including an acquisition by a national carrier or cash-heavy private equity player. Traders jumped on the news report. In morning trading shares of Dobson quickly surged 6.5%, or 66 cents, to $10.75. The stock-moving chatter about Dobson comes on the heels of another big play in the telecom industry. On May 21,Goldman Sachs (nyse: GS - news - people )and TPG bought provider Alltel (nyse: AT - news - people )in a $27.5 billion takeover. (See: " Alltel Buyout Helps Spread the Wealth." ) That wireless provider had attracted a lot of attention because of its high cash flow, low debt, and significant share of the rural and suburban American market, areas that typically have less competition than urban markets. (See: " Alltel Talk About Takeover Action.") In morning trading, those companies operating in the Telecommunications Services sector, as defined by Revere Data, saw shares rise 0.2%. The Associated Press contributed to this article.
Dobson Considers Sale of Firm By AMOL SHARMA and DANA CIMILLUCA June 25, 2007 Rural wireless provider Dobson Communications Corp. is considering strategic options, including a sale of the company, people familiar with the matter said, as deal activity among the telecom industry's smaller players quickens. The company, which has a market capitalization of $1.73 billion and debt of about $2.67 billion, has hired Morgan Stanley to explore its options, a person familiar with the matter said. It is possible the company could opt not to pursue a sale. A spokesman for Dobson didn't return calls for comment. The move comes as private-equity firms are increasingly striking high-profile telecom deals, leading to higher share prices for some smaller telecom companies in recent weeks. Dobson, of Oklahoma City, markets wireless services in rural and suburban areas under the Cellular One brand, serving about 1.7 million customers. It gets significant revenue from roaming partnerships with major U.S. wireless operators AT&T Inc. and Deutsche Telekom AG's T-Mobile USA Inc. For potential buyers, Dobson and other rural operators offer access to markets where penetration of cellphones isn't as high as in major metropolitan markets, leaving more room for future growth. Another appeal is that a larger operator could later acquire the company, people in the industry say. Dobson operates in several Midwestern states, parts of the Southwest, Alaska and upstate New York. It has expanded its reach by acquiring smaller operators. Dobson's competitors include such carriers as Alltel Corp., Rural Cellular Corp. and US Cellular. Two private-equity firms agreed last month to acquire Alltel, the nation's fifth-largest cellphone company by subscribers, in a deal valued at $26.3 billion. Earlier this month, Silver Lake and TPG's TPG Capital LLC announced a deal to purchase telecom-equipment maker Avaya Inc. for about $8.2 billion. Dobson's stock price has climbed steadily in recent months, partly on buyout speculation in the rural wireless sector, and was at $10.09 at 4 p.m. Friday in composite trading on the Nasdaq Stock Market. Dobson got 22% of its overall revenue last year through roaming partnerships, but the economics are beginning to sour as competition intensifies in rural markets and large carriers build out networks to previously underserved areas. Another risk for a buyer: Dobson receives funding from the federal government's "universal service" fund to finance its build-outs in high-cost areas. The Federal Communications Commission is considering a cap on how much carriers like Dobson could receive. WSJ.com
T-Mobile really needs to buy Dobson - then pick up Unicel - that would be the best two options for them. The only reason I don't say Suncom is because they already have a really tight roaming agreement with Suncom. Suncom nationally roams on T-Mobile; and in the Carolinas T-Mobile roams on Suncom. Suncom will bow down to T-Mobile one day, or maybe just get T-Mobile funding, and stay independent. Much like Chinook/EDGE do with at&t.
You left out at&t. If you check Suncoms coverage areas you will see they roam on at&t A LOT. If you also check out TMs roaming you will see they roam A LOT on at&t in the Carolinas.
Now hasn't the Cellular One brand name decreased in many markets from a few years ago? I remember they used to be in parts of CA that Alltel took over.
Now this could be an interesting twist to the Vodafone stock sale to Verizon by July & make some more speculation that they could be interested in this deal, especially with the 700 Mhz coming up for auction.
It would be interesting if Vodafone ends up buying all these rural carriers that have been neglected such as Suncom, Dobson and Unicel, and then buy a lot of 700Mhz spectrum. I doubt it will happen especially with the US market becoming saturated. I think most of that 700Mhz spectrum will go to the existing carriers, not to create new ones. I hope Nextwave doesn't decide to reappear.
I hope Dobson doesnt sell, there needs to be more independant carriers and not just a big three so to speak. Alltel sold out and now maybe Dobson. Dobson hasnt been neglected but the opposite. Dobson has been buying out mom and pop companies like NPI-Omnipoint, RFB, Alpine PCS, Hilands Cellular and some Alaskan companies and probably a couple I have forgot. Theres been speculation of Dobson picking up a few more companies. If it happens I would rather see AT&T get Dobson, they already have a huge wire structure in alot of the markets. Tmobile seems alittle 850 leary and they are dumping all of their money in UMTS and AWS auctions. Verizon wants Vodafone stocks. Sprint doesnt make sense and they are hurting plus most of the Dobson areas have Nextel all ready. US Celluar would make sense due to their native coverage plus Dobsons make sense, minus over laying a ton of towers with dual band CDMA. I would love to See a merge or buy out of Centennial Wireless, Suncom and Dobson all Combined into one company.
I agree with Cellonetech. I think that if Dobson/CellularOne is bought out by a company, I think that it should be AT&T. AT&T, I believe is vastly 850 MHz already and I think that they could use some more rural coverage. Also, I live in the thumb of Michigan and there are only Nextel and a very small CDMA company to compete with Dobson, so AT&T would be a great competitor. T-Mobile is only 1900 MHz so that wouldn't make sense to buy out a mostly 850 MHz company. It wouldn't make sense for Verizon, Sprint or Alltel to buy it out since they are all CDMA and Dobson is GSM and also Sprint is 1900.
You have Verizon? I didnt know Verizon was in the thumb. I thought it was just Thumb Cellular, Dobson and Nextel down there.
