FirstNet Contract Important to Stock Price of Winning Carrier, Analyst Says
AT&T and Verizon appear to be neck-and-neck in a fight to become FirstNet’s lead partner, analyst Damon Verial said Wednesday in a report on financial website Seeking Alpha. “The importance of winning the FirstNet bid cannot be overstated for the…
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stocks of these companies,” Verial wrote. “Becoming the FirstNet provider will give the winner a de facto monopoly on the national wireless network employed by the federal and state governments. This essentially guarantees the continued existence of the winner, protecting it from a possible bankruptcy (e.g., as a result of competition or disruptive technology to the wireless market) and should therefore change the lower bound valuation of the stock price (i.e., liquidation will not be possible as it would imply the destruction of a government system).” Verial also said the contract comes with many strings attached. The requirements are complex, he said. “Not only does it ask the wireless carrier to connect the entire country but it also requests ‘creativity’ in the bid.” Other industry observers see AT&T as more likely to emerge with the FirstNet contract (see 1601220053).