Risk of Supply Shock From AT&T

Another investor question arising from Monday’s megamerger–which plumbers will AT&T go with?

Combined, AT&T and Deutsche Telekom’s T-Mobile USA spent roughly $11 billion in 2010 on wireless capital expenditures–that is, the plumbing that keeps their networks flowing freely. If the merger is approved, big changes may be made to how those billions are spent, creating winners and losers among infrastructure suppliers.

In the early going, AT&T expects to boost its own capex by $2 billion in order to integrate T-Mobile’s network. One winner could be tiny Tekelec, said analyst George Notter of Jefferies. AT&T accounts for a fifth of its revenue and might use more of the company’s technology to unclog its network by shifting traffic to T-Mobile’s.

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