Telecom Mergers

In every sector mergers are taking place and among them the topmost is telecom sector.  

Though there has been disputes between the large national and regional telecom service providers, rural operators such as CenturyTel and Commonwealth Telephone  could be ready to do some deals with smaller outfits.

I also believe the next wave of consolidation is likely to be focused more on the smaller rural properties and see the large independent rural providers such as CenturyTel as being among the acquirers

 The Lucent merger : Lucent has limited growth prospects, and those already are figured into the stock price ."We would not be adding positions based on limited upside potential," the analysts recently advised investors.

MAKES SENSE:That's why some analysts think Lucent, spun off from AT&T  in 1995, might be better off combined with another big player. Analyst has issued a report on Feb. 11 analyzing what a combination of Lucent and wireless equipment maker Motorola would look like.

Well this Lucent deal would have a negative impact on Motorola's financial profile in the short term but would benefit it over the long run.

The markets rose for both Motorola and Lucent in between the ongoing deals .

Benefits of this deal :

The combined company would be able to expand into new markets without adding sales force or industrial capacity. Lucent could move deeper into the wireless market, reducing its reliance on the declining market for traditional wired gear. Motorola could move beyond the wireless handset market with a more effective strategy for building and selling wireless infrastructure.

Conclusion :

For better or worse, the U.S. telecom are in consolidation mode. That means their capital budgets are going to fall, putting pressure on suppliers like Lucent. It's probably just a matter of time before the equipment makers start merging, too