Embarq Corporation (EQ) - CenturyTel, Inc. (CTL)
February 2, 2009 (8:25a) - Tennessee Regulatory Authority Status
The Tennessee Regulatory Authority has scheduled a "Status Conference" on Monday, February 9, 2009, for the primary purpose of establishing a procedural schedule for its review (0800219) of this transaction.
As noted previously, the TRA has not yet determined if a hearing will be necessary in this case. Presumably this will be decided, or at least discussed in detail the the Feb. 9 conference.
In general, the fact the regulators in the key states of Tennessee, Ohio, and Pennsylvania have yet to adopt procedural schedules signals potential delays beyond expectations. The procedural schedule delays must be attributed in large part to the fairly motivated intervention of entities such as Comcast, SprintNextel, and local carriers in each state. This activity has very likely created additional and perhaps unexpected work for both the companies and respective regulators in setting the review schedules.
Clearly, this transaction will not close before the end of the first quarter or very early in Q2 as was believed possible initially. Instead, the state and FCC reviews at this point now indicated delays well into the second quarter of this year, and conceivably into the early part of Q3.
January 30, 2009 (10:20a) - FCC Status
The companies filed their response to comments/opposition on January 23, 2009.
Along with the companies' filing, several intervenors also filed initial or follow-up reply comments on the 1/23 deadline. Intervenors in the review now include: Accelerated Data Works, DeltaCom, Sprint Nextel, Communications Workers of America, National Association of State Utility Consumer Advocates, Independent Telephone and Telecommunications Alliance, New Jersey Division of Rate Counsel, NuVox and Socket Telecom, and Comptel. It must be noted that all third-parties in the FCC review are in opposition to the merger and/or are petitioning the FCC to impose various conditions on the the merger.
The New Jersey Rate Counsel filing offers a fairly good summary of the current position of the intervenors in general:
"Rate Counsel reiterates its recommendation that the FCC seek additional detailed information from the Applicants and also that the FCC require tangible, measurable conditions and commitments to ensure that consumers benefit from the proposed transaction and are protected from any harm that the transaction could cause."
Again, the interest in this deal comes as somewhat of a surprise, but remains viewed as non-problematic for this transaction's overall chances for success. The third parties in this case are clearly using this review, as well as the CYCL-T review, as opportunities to aggressively participate in FCC merger reviews under a new administration. In other words, the concern/opposition is not entirely genuine as it relates to the proposed merger itself.
Although the FCC's review habits for currents mergers can not be confidently gauged yet, it is reasonable to assume that the new leadership will not significantly altar the regulator's recent habit, especially in mid-sized transactions such as this one.
In sum, there continues to be no expectation of major delays in the FCC review regardless of the seemingly motivated opposition. Barrin unusual developments in the review, FCC approval remains anticipated before the end of April 2009.
January 29, 2009 (12:00p) - Pennsylvania PUC Status
The Pennsylvania PUC has generated this "Consolidated Case View" for public access to documents in the review of this transaction.
As of this entry, the PUC has not released a formal procedural schedule and, more importantly, has still not established a public hearing date in this case.
As it now appears highly unlikely that a hearing date will be determined before the end of this month as anticipated, the PUC decision will very likely be pushed into at least April/May of this year.
