More US phone deals
It may seem that the opportunities for consolidation in the US telephone business would be nearly nonexistent, given the pace at which the industry has been rolled up over the past five years. But just recently, two new and moderately big deals were announced.
First, US business phone company Paetec Holdings bought out bankrupt rival McLeod Industries. The deal was for $492 million in stock and over $60 in debt assumption. Both companies specialize in providing local and long-distance telephone service and broadband Internet to businesses and institutions, and as such are rivals to ever growing AT&T and Verizon. The move will expand Paetec's customer base by over one third.
In 2006, Paetec merged with another similar company, US LEC, with a different geographic footprint.
A Wall Street Journal article ("Paetec Aims to Be a Force With McLeod Deal", 9/17/07) quotes Pactec's CEO as saying: "The consolidation of the larger carriers has strengthened our position…. "They feel they don't have any choices." The idea is that smaller businesses are unlikely to get close attention form the larger companies and may be willing to try a smaller company.
Second, T-Mobile, the US cellphone arm of Deutsche Telekom (Europe's #1 phone company), announced it would acquire SunCom Wireless, a US wireless carrier based in the Southeast and in Puerto Rico and the Virgin Island. SunCome already had a close relationship with T-Mobile. The deal will boost T-Mobile's 27 million customer base by over a million, and will expand its service area. T-Mobile is the #4 US wireless carrier. The deal if for $1.6 billion.
8:19:05 PM 
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