New white paper on Location-Based Services

We are pleased to present our latest white paper titled “Location-Based Services – Concepts and Models”. This is available under CellStrat (www.cellstrat.com) White Papers section. The copy posted there is an abstract. If you need the full version, feel free to email us at contact@cellstrat.com

MT

Verizon + Alltel => Done

As we reported yesterday, Verizon signed a deal to acquire Alltel for $28.1 billion. Wow..are things fast. The rumor arose yesterday and the deal is done today. Possibly Verizon kept it under the wraps to thwart any competitive bidding. As we suspected, Alltel walked away with a billion dollars more than the figure mentioned yesterday. The two private equity firms behind Alltel – Goldman Sachs and Texas Pacific Group were able to recoup their $27.5 billion and some more in seven months. Nice deal for them. With credit markets in crisis, these firms probably want more cash on hand and they walked away with a nice profit (albeit not a large one) in a short time.

AT&T lost its No 1 leadership mantle. But these things hardly matter. Too much M&A to pin No 1 mantle on any one firm for too long…

MT

Verizon + Alltel

Wow.. just read the The Wall Street Journal (www.wsj.com) alert that Verizon may try to acquire Alltel for 27 billion dollars. This southern/midwestern carrier has 13.2 wireless customers and many million wireline customers. A combined entity of Verizon plus Alltel would boast 80 million wireless subscribers as opposed to the 71.4 million subscribers that AT&T has. It would create a wireless giant in Verizon (as if it is not already too big) and give it the bragging rights to being the largest wireless carrier in United States; a right which Verizon lost to AT&T when Cingular acquired AT&T Wireless.

We think Alltel is hot telecom property and may invite a bidding war. There are others who would want additional wireless coverage in USA like Deutsche Telekom or Sprint. Vodafone is another one which is rumored to be wanting to break from Verizon and would like to create a fully owned US subsidiary. We think Alltel may invite a higher valuation and may bargain as such with Verizon. Also it would be interesting to see how the antitrust dept reacts though we presume that Verizon has quizzed them on this topic.

Alltel is currently owned by a group of private equity firms led by Texas Pacific Group (TPG Capital) and Goldman Sachs who bought it earlier for 27.5 billion dollars.

US wireless space continues to be interesting for M&A..

MT

$199 3G iPhone

Reports indicate that AT&T may offer a $200 rebate on a 3G iPhone to be released this summer in the United States. This is interesting news as AT&T was not willing to discount the iPhone so far. This indicates that either there is pressure to increase iPhone adoption or AT&T is trying to create stickiness in case Apple has negotiated an agreement to sell an unlocked iPhone to the public.

Note that this $200 rebate will be given if the customers sign a 2 year contract or renew existing contracts. The $399 list price is for the 8GB iPhone. The 16 GB cousin goes for $499 and may get a $200 rebate as well on a two year contract.

This strategy may help accelerate migration of customers from competitors like Verizon, Sprint and T-Mobile to AT&T.

Unconfirmed rumors also indicate that the other GSM carrier in USA, T-Mobile is turning on its 3G voice network in segments in next few days. There is only a voice rumor, 3G data may not be enabled yet on T-Mobile USA network. Even it was, the frequency T-Mobile is using is different than that of Apple iPhone / AT&T 3G frequency. So it is quite likely that the unlocked 3G iPhone will not work (in 3G mode) on T-Mobile 3G network (it may work on 2.5G / EDGE band of T-Mobile network though). Then the only audience for the unlocked 3G iPhone are folks who buy it and take it abroad for use on GSM networks in other nations. The whole T-Mobile story is a based on rumors so take it with a pinch of salt.

Average iPhone user spends $100 per month due to a higher priced data and voice plan. So AT&T can recoup the $200 iPhone rebate from a customer in no time.

The 3G iPhone comes almost on one year anniversary of the original iPhone. It is a fascinating device, to say the least. It has opened up new business models in mobile space by converting a bland mobile device into a personal portable computer. We continue to salute Apple for its innovation and creativity.

MT