A report from ThinkEquity Partners L.L.C. said that AT&T Inc.’s pending acquisition of BellSouth Corp. has affected their wireless affiliate Cingular Wireless L.L.C.’s spending on its network infrastructure, and that some of the carrier’s equipment vendors are feeling a squeeze as a result.
According to ThinkEquity, Cingular’s spending with network equipment supplier Carrier Access has dwindled from $12.5 million in the second quarter to $3 million in the third quarter-and that the fourth quarter doesn’t look good either.
“The culprit behind the 3Q shortfall and the continued poor outlook for 4Q remains a simple one: Cingular,” ThinkEquity said in its report.
ThinkEquity said Cingular’s acquisition of AT&T Wireless Services Inc. in late 2004 also caused a “drastic downturn” in spending from mid-2004 to spring 2005, after the deal closed.
However, it appears that only some equipment vendors are being affected; Cingular’s overall capital expenditures have increased each quarter this year. The carrier posted capex spending of $1.4 billion in the first quarter, $1.6 billion in the second and $1.8 billion in the third.
Cingular, ThinkEquity and Carrier Access declined to comment on the issue. Cingular is in the midst of deploying a 3G network.
Despite its warnings, ThinkEquity remained optimistic about Carrier Access’ future. “Carrier is well positioned as a takeover candidate and has a very strong balance sheet, making the valuation lower than at first glance.”
