Mergers in the US telecommunications industry and market valuation effects

Summary form only given. A number of telecom companies in the US embarked on a corporate strategy to position themselves as major players in local and international markets by growing rapidly through mergers and acquisitions. This should have positioned these firms very well for the next generation licenses that will be auctioned off in the United States. The purpose of this paper is to investigate whether these merger and acquisition strategies were successful in general and, in particular, which firms benefited the most from this corporate strategy. In our analysis, we investigate short and intermediate term stock price performance for individual firms as well as for a group of firms such as local and long distance bidders. These classifications reveal some interesting insights into the question who gained form these mergers and who is well positioned for the future. In addition, we estimate the market perception of telecom mergers´ synergies by measuring the change in combined market values of bidders and targets after the merger announcements. Finally, we assess the probability that mergers would proceed by examination of the change in the relative movement of bidders and targets prices before and after the merger