Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple Coarclay, and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Okay, so we have some big news. Echo Star Wars agreed to sell spectrum licenses to AT and T for about twenty three billion dollars. I'm looking at Echo Star shares right now, they're up seventy seven percent. So we wanted to talk about this right so our producers are scrambling. It's a mad dash. Who are we gonna get. We're gonna pull in someone who's hanging in Nantucket. That's right, it's John Butler, Bloomberg Intelligence Senior telecom atalysts.
John.
We really appreciate you taking the tele for album.
Good morning guys.
Good morning. Yes, we pull on the big guns. So explain to us right off the bat, what does this deal mean.
So obviously, given the price action, it is huge for EchoStar, and I think at issue for them is they've been trying to build their own five G network to compete with the big guys, and they have the spectrum to do it, but they didn't have the capital to do it. They really have an outsized debtload that they've really been
struggling to service. And the FCC intervened here and they've been pressuring on the head of EchoStar, Charlie Urgan, to either use the spectrum and start to fill those airwaves or to sell it. And so I think this is maybe the first of maybe even more moves to sell
more Spectrum on the part of the company. But given the price tag, it alleviates that capital crunch, and so any risk of default here I think is minimized now in the wake of this deal, And so investors are breathing a big sire Leave talk.
To me a little bit, John about this price. Twenty three billion dollars, nine billion more than EchoStar paid for the Spectrum, five billion more than the appraised value is at and t getting value out out of this twenty three billion dollar deal? Are they grossly overpaying?
So I'll say Spectrum is like houses on Nantucket, you know, the price just continues to go up over the years, you know, particularly with the advent of AI now and the need for more capacity to carry that added traffic. It's really not a concern on my part as to whether or not AT and T is going to get a good return on this investment. And again all kitting aside, I go back to that analogy that really spectrum does increate,
It tends to increase in value over time. It's a very ill liquid market, so it's hard to really get a good feel for their fair value of different frequencies. But I have no doubt that at the end of the day, even expensive is going to prove cheap here for them.
Hey, John, can you take a little bit into how this is going to expand AT and T's network.
So if you look at the spectrum holdings of Verizon, T Mobile and AT and T and spectrum, I'll just take a step back for listeners that don't know, when you're making a caller transmitting data over the area, you're doing it using spectrum. And the more you have think of it like the width of a pipe. The more you have, the fatter the pipe, the faster the download speeds. And so AT and T intends to put this spectrum to use almost immediately to really enhance the download speeds
of the network. And so network quality gets better, word gets around, people begin to say AT and T has a better network. From a branding standpoint, there's a real benefit here. And then longer term again, as AI continues to scale up and ifrincing those queries that we make and the answers we get back. Now, a lot of that's going to be done at the edge of the network where you need that big fat pipe to support
that traffic. So I think in their minds, those are the two things there, after improving the network quality and the brand image and having the pipes to move the traffic that's coming down the road here and.
John yesterday, on a call with investors, AT and t's CEO Stanky said that, you know, regulators shouldn't be concerned that this transaction was going to put too much wireless spectrum, I guess in the hands of one of the largest telecom carriers. That's what he told investors. But do you think regulators are going to bulk at this No.
I think regulators have been behind prompting the sale, if that's the right way to put it. So again, the FCC was really on Echo Star to sell some of that spectrum. They're educated and well educated and wireless as regulators to know that it was probably going to be one of the big guys that would step up and buy it. If I look at at and T spectrum holdings the whole, they had a competitive disadvantage or less holdings in the band or the frequencies that they purchased
from Echo Star here. So I don't think there's any sort of regulatory argument against the deal here, but I would defer to our legislative analysts in Washington to really make the call there. But I'm not concerned.
Stay with us for more Bloomberg Intelligence coming up after this.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on album Barklay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
So a lot of headlines in the news. One of them that caught my eye this was Eli Lilly. Okay, so their weight loss pill. It's moving a little bit closer, one step closer to this potential approval. This came after results from its latest trial. So what we want to do is get more details from that. Let's bring in Sam Fazzelli. He is Bloomberg Intelligence Director of Research for Global Industries and Senior Pharmaceuticals, joining us from London. Sam,
welcome back to the show. So this is the second trial of the pill, I believe, So how is it different this time around?
It is, Lisa, thank you for having me back.
And I'm sorry that Paul is in here for me to give him grief because he always tells me off the technia.
He always busts your.
Job next time.
And so look, this is a large trial in dibet diabetic patients, but it will be diabetic patients, so they're looking at the impact in that population. That population tends to have less of a weight loss for our variety
of reasons. But it's come out exactly where we thought it would come out, actually maybe a little bit better than people's lowered expectations after that first trial read out a couple of weeks ago, if you remember when the stock got hit severely Lily stock, and so we're see about ten percent weight loss and still the same high levels of discontinuations. This is a long trial, so you even find a whole bunch of people and place would discontinue because they get bored, they want to go and
get wed loss from another drug. So it's actually pretty decent data. And I think you can see that Nova is sold off on the back of this because it's a small molecular pill. It's a pilly can take, relatively easily manufactured, and you can take without too much complications in terms of don't eat to eat, take in the morning, takeing the evening, that sort of stuff.
And that's the key, Sam. And I'm wondering how much of a game changer this is because it's not an injection, right, it's a pill. You're looking at an industry that by twenty thirty is projected to be ninety five billion dollars. So if this goes Eli Lilly's way, is it a game changer for the company?
Yeah, I mean it has gone their way.
This is unless something shows up in the enormous number of files that they file to the FDA, or side effects or something.
This is a drug that's likely to get approved.
The question is how do you use it.
You've got the injectibles once a week, once a week, not a big ask, very fine needle. People even tell me they don't even notice the needle going in and out, but still you don't see the needle. So what is its it? Ten percent weight loss versus twenty percent weight loss? So what is the right way forward here? Some people are needlephobic, it's going to be helpful for those. Some people can't get access to the drug because it's hard
to manufacture. The other ones that are injectibles sterile manufacturing. So there's lots of room for this. And of course there's this other thing that I think a lot of people keep thinking about, is you've got your big weight loss with your injectables six months, in nine months, in twelve months, in switch to this and help you maintain You might not even need the higher doses, which are causing some side effects. Maybe you can get away with a lower dose and maintain that weight loss.
They would have to do a trial to prove that though.
So, Sam, as you're talking, a question kind of popped into my head. You're talking about all the different advantages to it. What about has there been any talk about price, like how much could this pill cost compare to an injection?
I mean, it would be an error for these companies to start competing with themselves on price with their products. If you find that actually you can go with the lower dose of this. Your margins are a bit better, definitely because there's no device involved. But I don't know what the small molecule manufacturing because they're not all small malley ques are easy to make, right, and it may be small discount perhaps, I don't know, but but I doubt that this will come out at a.
Level that's significantly lower.
On the other hand, it does have lower weight loss, so maybe maybe there is an opportunity to kind of I see pari pass whu if whatever, If that's the right phrase, in line with its weight loss that you're getting.
I want to branch out and talk just biotech on a bigger scale for a moment because M and A hass you know, been pretty active right and in the sector we had Merk buying Verona Pharma I think it was for their respiratory treatment recently. What's the outlook for M and A there? And I know one of the hurdles for biotech, and it's sort of an ongoing hurdle is changes to regulatory framework, So talk to us a little bit about that.
Yeah, did that those changes if you're talking about perhaps the from an FTC perspective, those those have not hindered and ideals. When we counted a whole bunch of deals in the first half of this year, and it looked like a pretty strong year for deals, and that's not even including.
The Verona one. The thing here is a lot of executives in the biotech boord I'll still looking at their share price charts thinking back to those beautiful days of two or three years ago where the share prices were seventy eighty percent higher and thinking is it the right thing for them to do?
To sell?
Clearly some have got to the point of accepting that, and some have done it from a position of strength. Verona was rocketing up before they got taken out at whatever, over one hundred dollars a share, so Farmer is definitely interested. Maybe if the interest rate environment, going back to what we were just hearing earlier, does go in favor of cost of capital coming down, maybe you'll start seeing some more deals, and of course that would also help biotech
valuations potentially in general. So maybe there would be an interesting time to look out to in the next six to twelve months.
All right, Sam, and.
The last minute, do you have here another article caught my eye. President from Health and Human Services Secretary Robert Kennedy Junior. There there are leslie funny to ban the COVID vaccine within months. Did this surprise you at all?
Well, yes, no.
The thing is it's rumor, and I think the HS has said, look, there's no nothing that we can tell you today that we're back this. I think that would be a mistake. And choice is what Americans have always valued in the freedom that the US has.
Let's just leave the choice there, give.
People all the information, do the scientific work that the HS wants to do, and just leave it open and give it to the discussion between physicians and patients and subjects and people.
I think that's the right way.
Whether that will happen or not, but if it does happen, we've got a bad time for Biontic and Moderna because that's the only source of revenue.
Stay with us for more Bloomberg Intelligence coming up after this.
You're listening to the Bloomberg and Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Corplay and Android Auto with the Blueberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
What's also a piece of America are eyewear. Right, you go out and it's like you're styling, You're wearing your fancy sunglasses. It's a nice day out. You know, you have to look good when you're going out. So this is taking us to the competitive eyewear space.
We're saying.
Sources are saying that the maker of ray Band sunglasses, I have my own pair, as the Lord looks out again, they're considering increasing their steak in Nikon.
Now.
The company has really been pushing ahead with these smart glasses initiative, so we want to find out more about it, right, so let's go to Diana Gomez. She is Bloomberg Intelligence senior equity research analyst. Diana, thanks for joining us up. So how much they want to boost their steak? And I kinda and what's the current holding at.
Hi, Yes, thank you for having me. So at the moment, it's uh about a nine percent stake, and the reports we are getting is that there is a potential interest to increase that to about twenty percent, which would be in the order working at the current market cap maybe a three hundred million dollars or so, which given a se or Euxotica's cash position would not be quite material, but still quite a sizable stake in Nikon from a few years of quite a long experience as in their
joint venture Connectending that.
Connect the dots for us though, because what does Nikon have that Luxotica wants.
Besides the brand name that is quite well known to even the consumer side outside the professional sector, there is the technology and the know how that can be utilized and leveraged by both companies. So we are talking about the distribution of SLR combined with nohow and brand a strong brand name of a company like Nikan. And they
have been partnering in different areas. One of them which is quite an emerging ones is the myopia control which is which are these lenses that are meant to solve the progression of myopia in children, which is quite important given that forecasts are that's by twenty fifty about half of the world population could be suffering from myopia. So it's it's quite an interesting area as an example of those where they are collaborating, particularly in China where they
are selling already some of these myopia controllances. With the FDA approval for the SEL or auxosticasles still being in the pipeline as well.
And in quick thirty seconds, Diana, what are who are some of Nikon's competitors in there in the space and who does it supply.
So they would be competing with other wcees and also even photographic kind of equipment, and the space is quite diverse at the moment because even with so or Auxotic at this partnership just potential extended partnership just shows how the company is going more into the medical technology and medical devices filled in terms of trying to also find
medical issues just looking at the eye. So that's a new area where companies within the optomological and visual space are looking at and WNCES companies that are potentially with the consumer more known for the photo cameras also play a role with So it's all quite well integrated and in the world of smart classes.
Stay with us for more Bloomberg Intelligence coming up after this.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple Corplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
All right, I want to move on to this story. We heard it yesterday or Sted right the management now they're trying to reassure their investors. This is after the Trump administration while they block construction of its almost finished Rhode Island wind farm. So we want to dig more into this story. Let's bring in Patricio Alvarez, Bloomberg Intelligence, equity research analysts, power and gas utilities. Who better to talk to them than this. So what does this mean
for Orsad's plan share sale? That's what I wanted to start right.
There, absolutely, So let's begin where Oristed's management NA went ahead with a plan for inequity increase.
That's quite substantial.
So that's sixty billion kroner that they announced on August eleventh. That was nearly forty six percent of their market cap back then, So it is a significant size of an equity increase. And that was mainly to cover the construction of Revolution Wind and that was because the company was not able to sell a stake in that project. That's mainly like, that's really their their key funding strategy is to sell stake selles in there in the projects that
they're building. They were not able to do so, so they needed to go for this massive equity increase. Now that the stop work order that you just mentioned, I think most of the market did not see that coming, given that the project was already eighty percent of the way. Forty five out of sixty five wind blades were already on the ground. So this is you know, this is unprecedented. I think the Empire Wind stop work order and then restart is different in the way that the project was
not as as far in advance as this one. So it will dampen investor confidence ahead of the ahead of the plan that could increase. But we do know that the backing of the Danish government, which has committed a fifty fifty percent pro rata share of that it could increase. Well, we'll give some reassurance and will probably help secure those funds.
I know the stock took a big hit, fell to a record low, but it bounced back again. I believe it started trading again right overseas and rallied. And why is that more? That was it over sold?
It?
Investors think it was over sold, you.
Think, I think I think there was a big mix of boats. So the stop work order came came in Friday after market and I think markets didn't have time to digest the implications to the equity increase after you know, we had a bank holiday in the UK, so markets open up this morning and that was mainly because of
these reassurance of Oysted. So the company came out with a statement saying that the Danish government has actually reached rated or reaffirmed their intent to participate at least in fifty point one percent of that equity increase, with the remaining set to be underwritten. So the company, the company tried to instill some confidence, you know, reta into the plan. And as we know, we think that the backing of the Danish government is a big endorsement for this equity increase.
So we do think it will go ahead, but perhaps we will have to wait into early September where there will be an a GM and see where the share price is trading at them.
Can you walk us through the president's arguments against offshore wind and then and then what supporters are saying, the pros and the hans against it?
Sure?
So, yeah, the administration has flagged that there are several issues with wind development in general. Firstly that it could impact the environment for whales, so that it could actually hurt whales, that birds could fly into the wind blades, and and then on the other on the other side of or on shore, there's also a community resistance. There's been there's been a few protests actually saying that that the offshore wind doesn't look good on the horizon. So
these are these are several things. But but again or State actually had all the permits for for for this, for this farm to go ahead, and several studies actually you know, countering the impact of these of this offshore wind farms versus their benefit. Offshore wind has been a niche technology in in the US is still a nascent industry. It's a bit more advanced in Europe, but in the US we still have only a handful of megawats.
But still it's it's an important part of the energy mix.
It will help uh decarbonize the economy, will help add more electrons into the grid and avoid using more expensive gas.
And in the time we have left, Patricio, can you talk to us a little bit about Orsted's competition, their rivals in this space and what this possible setback for them might mean for the competition. Is this, you know, actually an advantage does it give them an advantage in some.
Way, So perhaps outside of the US, I would say there there will be you know, there's possibly some silver linings for other competitors. We cover other companies like RWE, which is heavily invested in European offshore wind. So the company is still moving ahead with plans in Germany. That look, you know, clear that there's more regulatory certain to hear in Europe, but conditions are still I would say not straightforward for offshore wind development in Europe. A few auctions
here have been unsuccessful. We've only tendered a handful of megawatts in the past.
Two or three years. So that said, there is a silver.
Lining for them, but I wouldn't say that the outlook changes materially.
This is the Bloomberg Intelligence podcast, available on Apple, Spotify, and anywhere else you get your podcasts live each weekday ten am to noon Eastern on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal