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How Even a Failed AT&T/T-Mobile Deal Hurts Rivals

Posted by Soulskill on from the can't-lose-for-winning dept.

An anonymous reader writes "The attempted merger between AT&T and T-Mobile has fallen on hard times amid antitrust concerns, but there's a potential silver lining for T-Mobile — one that would give them a boost over competitors anyway. Reuters reports that T-Mobile USA would be entitled to a hefty breakup fee including $3 billion in cash as well as spectrum and roaming agreements. 'In a research note, Moody's said that could also lead to a network sharing deal between the two companies, reasoning that it "would make sense given the spectrum that AT&T will have to cede to T-Mobile and the 3G roaming agreement between the two." That would make life especially hard for No. 3 U.S. carrier Sprint, which has been one of the most vocal opponents of the AT&T/T-Mobile deal, going so far as to file a lawsuit. ... Smaller rivals such as MetroPCS and Leap Wireless may be affected even more because T-Mobile is eyeing similar customer segments.'"

5 of 51 comments (clear)

  1. Deutsche Telekom still doesn't want T-Mobile by mkraft · · Score: 5, Insightful

    All that's well and good, but it doesn't change the fact that Deutsche Telekom doesn't want T-Mobile USA. They don't want to run it and are putting the bare minimum into it to keep it going. Since the deal fell through, that means that basically Deutsche Telekom can't sell T-Mobile USA to any of the larger companies (I doubt Sprint would get approval either since it's one of the top 3 companies).

    That means that either Deutsche Telekom will try to sell T-Mobile to one of the smaller companies for less than they would have gotten or Deutsche Telekom will simply break up the assets of T-Mobile and sell them off in bits and pieces. The spectrum T-Mobile already has plus what they'll get from AT&T is pretty valuable. Actually AT&T could end up buying all of T-Mobile's assets, leaving just the company and it's customers behind. That could end up being worse for T-Mobile customers than an all out buy out.

    1. Re:Deutsche Telekom still doesn't want T-Mobile by guises · · Score: 4, Interesting

      There's been some speculation that CenturyLink might step up to buy T-Mobile. They're the third largest telecommunications company in the US and the only major one without cellular service.

      Speaking as a T-Mobile customer I've been ecstatic at the FCC's action here and I view the purchase of T-Mobile by almost anyone other than AT&T or Verizon with far less trepidation than I had previously. It would be nice if Deutsche Telekom changed their mind about the whole thing, that has been known to happen, but I can't really see a downside here.

    2. Re:Deutsche Telekom still doesn't want T-Mobile by ScrewMaster · · Score: 4, Informative

      Good points. Plus, the article mentions that T-Mobile will get $3 billion in cash. That's only partially true. DT will get the cash. My guess is T-Mobile will see very little, if any of that cash.

      Deutsche Telekom has already stated that it will not be investing any of that money in T-Mobile.

      --
      The higher the technology, the sharper that two-edged sword.
    3. Re:Deutsche Telekom still doesn't want T-Mobile by RobertLTux · · Score: 4, Informative

      its because of IP concerns since to setup the merger an English Long {redacted}Ton of passwords protocols and "stuff" had to be handed over to AT&T.
      The funds and such are paying for all of that or they could have

      1 Propose a Merger
      2 Get all the company secrets
      3 Fail the merger
      4 PROFIT!!
      5 crater the victim company

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      Any person using FTFY or editing my postings agrees to a US$50.00 charge
    4. Re:Deutsche Telekom still doesn't want T-Mobile by flash2011 · · Score: 4, Insightful

      It annoys me that people keep spouting this FUD, that if AT&T doesn't buy T-Mobile there are no other potential major bidders T-Mobile may break up and sell off assets piece-by-piece or shutdown completely.

      Off the top of my head I can see multiple potential bidders for T-Mobile at the right price (not the AT&T "I am rebuilding my monopoly price").

      For example it would make sense for both Telefónica (which already has a major presence in the Americas) or América Móvil (which also has a major presence in the Americas, with almost twice as many subscribers in Mexico as T-Mobile has in the United States. Both could find strong synergies in buying T-Mobile, up selling additional services to the Hispanic community.

      Vodafone as well has long wanted to use their own brand in the United States (especially since they are only a minority shareholder in Verizon wireless). The could sell their Verizon Wireless stake and use the money to buy T-Mobile.

      It could even make sense for China Telecom as they already plan to launch Wireless Service in the USA next year.

      I am sure I am just scratching the surface of potential bidders so please, please stop the "OMG, T-Mobile will shut down if AT&T doesn't buy them" FUD.