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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.

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.

But some other winners might come as a surprise: Apple is one, gaining quick access to T-Mobile's 34 million customers as potential buyers of iPads and iPhones. Enterprise customers of both AT&T and T-Mobile are also winners, several analysts said, because of the combined networks' expanded coverage in the U.S. and the opportunity to move to LTE networks faster in 95% of the U.S.

As for losers, Sprint, which had been rumored for months to be poised to buy T-Mobile from Deustche Telekom, is most adversely affected by the deal. Sprint has already registered concerns that consolidating the market from four major national carriers to three will limit customer choice.

For consumers or enterprise users, AT&T expects that a majority of the smartphones and handsets that AT&T and T-Mobile sell will work in either carrier's network. However, some T-Mobile customers now using devices that run over what is called the AWS network will be migrated into the 850 or 1900 bands of AT&T's wireless spectrum, which would require some kind of new handset, according to AT&T Mobility CEO Ralph de la Vega, who spoke during a Monday morning press conference.

The biggest unknown, and a potential drawback, is how the takeover would affect data and voice pricing. Analysts are split on whether the deal will increase prices, although AT&T argues that its previous consolidations with other carriers have consistently resulted in lower prices.

 

Winners

Apple is a somewhat unexpected winner in the deal. Apple started with AT&T as its exclusive carrier for the iPhone nearly four years ago, before expanding in the U.S. to include Verizon Wireless earlier this year. With AT&T's planned takeover of T-Mobile, Apple would easily gain access to 34 million potential iPhone customers "without having to ink another carrier deal," noted Mark Lowenstein, an analyst at Lens Analysis. The developers who have worked with various mobile operating systems are also likely to benefit from the consolidation, with fewer restrictions from one less carrier, he added.

On the other hand, bloggers at the GDGT site noted that other handset makers might not like the deal, since they would have one less carrier to sell their wares. "AT&T/T-Mobile will be able to command a huge amount of purchasing power and [will] wield that power to extract the absolute best deals from the likes of HTC, Samsung, Motorola, LG and HP. The one manufacturer that might actually gain is Apple, which gets to sell the iPhone to 33 million or so T-Mobile subscribers without having to negotiate with another carrier or risk alienating one of its carrier partners," GDGT said.

 

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