3 January 2018 HY Corporate Credit HY Multi Sector.Media. Cable & Satellite Telecom, Pay-TV, and Satellite Outlook Anthony Kiernan, (+1) 212 250-2587, [email protected] James Gilson. (+1) 212 250-6336, [email protected] Wireless: Overweight Relative to the 06 Index If we had predicted it (which we didn't) no one would have believed it anyway. Consolidation seemed to be storing a lot of pent up momentum, with carriers locked out of talking to each other after years of successive spectrum auctions and FCC-imposed quiet periods. With the most recent auction concluding in January 2017 and a Republican in the White House planning to re-boot the FCC and DOJ, it seemed that a wave of telecom M&A was imminent, right? Wrong. The perception was that Sprint and T-Mobile were going to merge and that it was going to set off a wave of intra•sector and multi-sector convergence deals. Fueling this view was the perception (also proven wrong) that SoftBank was looking for the exit door in Sprint. The reality was that even though SoftBank and Sprint held countless discussions over many months with Deutsche Telekom and T-Mobile USA (which has been widely disclosed in the press) and even with the press reporting that Deutsche Telekom made a last- ditch offer to SoftBank to try to save the deal, SoftBank's response was to essentially "double-down" by deciding to keep Sprint independent, increase its CapEx spending, and raise its stake in Sprint, nominally, to 85%. So much for wanting the exit door. With Sprint emboldened to continue being an aggressor trying to win share in the market, we expect competition to remain elevated for the foreseeable future (although we also believe rationality in pricing will prevail). The raised competitive environment combined with the highly anticipated arrival of 5G in the next few years (mobile standards likely in 2019 and deployment in 2020), is expected to create a boon in wireless CapEx over the next couple of years