MoffettNathanson says Frontier deal implications ‘mixed’ for Verizon competitors

MoffettNathanson notes that Bloomberg News and the The Wall Street Journal each reported yesterday that Verizon (VZ) was close to a deal to acquire Frontier Communications (FYBR), which has now been confirmed this morning. For Verizon, this would be “a bold step in the direction of convergence… which is, in our view, an absolutely atrocious idea,” the analyst tells investors. For Frontier, the deal “would represent an attractive exit and a very happy ending” while the implications for Verizon’s competitors are “mixed,” the analyst added. A Verizon convergence strategy would be “bad news” for AT&T (T) and T-Mobile (TMUS), if only because convergence is inherently deflationary for the wireless market, though the deal could be, perhaps counter-intuitively, “good news for Cable, in as much as convergence is a game only Cable can win,” said the analyst, who had a Neutral and $43 price target on Verizon and Buy with a $30 price target on Frontier prior to the deal being confirmed.