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AT&T takeover of T-Mobile: Winners, losers

Matt Hamblen, Computerworld | March 21, 2011
AT&T and its investors would clearly be winners if the $39 billion proposed takeover of T-Mobile USA is approved by federal regulators. The deal would make AT&T the largest U.S. wireless carrier by far, with 130 million subscribers.

Enterprises would also win, Lowenstein and other analysts said. Enterprises are more concerned with harnessing the ability of new smartphones and tablets than with "shaving a few cents off their wireless pricing plan," Lowenstein said. "They'd be happy with a little less choice [in the number of carriers] in return for a lot more network. And T-Mobile has never been a major player in the enterprise."

Dan Hays, a wireless consultant at PRTM, said AT&T and T-Mobile don't compete much on corporate accounts. Corporate customers at AT&T, however, would benefit from the deal with T-Mobile's 34 million added "in-network" subscribers, and those corporate customers at T-Mobile will likewise increase their network footprint while having access to more devices, including the iPhone, Hays said.

 

Losers

Sprint is believed to be the principal loser, since it is the third-largest national carrier, with around 50 million subscribers, while AT&T and Verizon are both neck-and-neck, each with more than 90 million.

Jack Gold of J.Gold Associates said the takeover "puts Sprint in a difficult position as the third, and distant, carrier by subscribers. This will put more pressure on them to merge."

Gartner analyst Phillip Redman, however, disagreed with the argument that Sprint is a loser, noting that the takeover could benefit Sprint by allowing it to further focus on low-cost services, which it already emphasizes with an unlimited voice and data plan that it advertises heavily.

Sprint issued a statement in reaction to the takeover, noting that, if the deal is approved, the combined AT&T and T-Mobile "would be almost three times the size of Sprint.

"If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically integrated companies [Verizon and AT&T/T-Mobile] that control almost 80% of the U.S. post-paid market as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete," Sprint said.

 

Draws

Consumers of smartphones and voice and data services from T-Mobile won't have to do anything for at least a year while the takeover deal is scrutinized by regulators at the Federal Communications Commission and the Department of Justice. The FCC will look primarily at whether the deal serves the public interest, while the DOJ will ensure that it is not anticompetitive, said AT&T's general counsel, Wayne Watts.

De la Vega noted that some T-Mobile smartphones in the AWS band will be moved to either the 1900 or 850 bands on AT&T, but that issue could be moot, since most customers buy a new smartphone every two years. Even if the deal is approved in a year, it would take one or two more years for a full network conversion, AT&T officials said. About 20% of all T-Mobile customers' phones operate on AWS, Lowenstein estimated.

 

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