Subject: [NEXTEL-1] Andy Seybold's 2003 Wireless Outlook

From: Marcel <[email-masked]>
Date: Fri, 03 Jan 2003 00:59:21 -0500

2003: The Wireless Outlook

By Andrew Seybold
January 1, 2003

OK, it's the beginning of the new year, and a column that looks
back or forward is a must. So, here is my vision of what 2003
holds for the wireless industry.

Let's start with a slam dunk. The U.S. Supreme Court will return
NextWave's spectrum to NextWave by the end of its current session
in June-my bet is well before. This will pave the way for the
company to present a plan to emerge from Chapter 11. Some folks
believe that NextWave will turn around and sell its spectrum.
Verizon could buy all of the spectrum for what it bid at the
re-auction for only a portion of it. NextWave investors would be
quite happy and Verizon could keep it out of the hands of its
competitors. But that is not likely. I believe NextWave will
emerge as a player along with a new set of players and add some
real value to the wireless scene.

When it comes to mergers and acquisitions, my crystal ball is
cloudy. I believe that all M&A that occurs in 2003-and there will
be a bunch-will be prompted more by the need for additional
spectrum than for economic reasons. With no new spectrum becoming
available until 2006 at the earliest, several wireless operators
will have to find ways to access more spectrum. If the NextWave
spectrum is off the block, this leaves spectrum already licensed
to other wireless operators. The most likely scenario is for
Cingular and T-Mobile to make a deal. T-Mobile has stated that it
isn't interested, but what it's really saying is that it's not
interested at last year's valuation. Cingular is the most needy of
the wireless operators and T-Mobile has a lot of 1900-MHz spectrum
in many areas that Cingular does not. Combining the two would be a
logical move. But it probably won't happen.

What if AT&T Wireless got together with T-Mobile? This could
really hurt Cingular, which would then have only one carrier for
roaming services, which it really needs in order to keep up its
pretense as a nationwide network operator. But if these GSM
players don't complete their deals before they've invested in
system upgrades, the billions of dollars in savings that would be
realized by merging now will be spent. The bottom line is I
believe we will end the year with only two "nationwide" GSM/GPRS
wireless operators, not three. How this plays out probably will
have little to do with logic and more to do with politics.

Sprint PCS has plenty of spectrum, but its parent (Sprint) has
reached out and drawn it back in closer to itself. To me, this
indicates Sprint is not looking to be on the receiving end of a
merger or acquisition. Since Verizon Wireless is still a part of
its parent (no IPO yet), I don't believe we will see any action
there either. But what if an RBOC that already owns a piece of a
wireless operator were to divest itself and go after all of Sprint
PCS? The values of all telecom properties have sagged big time,
but that doesn't mean a deal couldn't be pulled off. Boy, would
that be fun!

As for Wall Street, it will crown average revenue per unit, not
net quarterly adds, as king. Operators that can increase ARPU will
see their stock prices increase; those that don't, won't. Where
will increased ARPU come from in 2003? It will come from data.
Those that get it "right" when it comes to data pricing will be
rewarded by the Street.

Even if everything else I predicted is dead wrong, I predict it
will be an interesting year for wireless. And I guarantee this
last one will be right on the money!

http://www.wirelessweek.com/index.asp?layout=story&articleid=CA268297&spacedesc=Wireless+Internet&stt=000

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