This city’s full of hawks – On the Waterfront
AT&T said on Sunday it would buy T-Mobile USA for $39 billion, creating the largest wireless company in the United States. The combination of No. 2 AT&T Mobility and No. 4 T-Mobile-USA would have nearly 130 million customers, about a third more than current market leader Verizon Wireless the Wall Street Journal reported.
T-Mobile USA says the merger agreement is the first step in a process that may take 12 months or so, including regulatory approvals. AT&T will put up $25 billion and the rest in stock, according to the companies’ press release.
If it passes regulatory muster and shareholder approval, the merger would consolidate the two dominant GSM providers in the United States.
AT&T CEO Randall Stephenson said that putting the two networks together would boost network capacity in most urban areas. “It’ll obviously have a significant impact in terms of dropped calls and network performance,” he said.
“A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor,” read a March 20 statement from Sprint, as reprinted on AllThingsD. “If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically integrated companies that control almost 80 percent of the U.S. wireless post-paid market.”
T-Mobile USA uses AWS spectrum for its HSPA network, while AT&T has (unused) AWS spectrum (1.7/2.1 GHz) and will soon open up the 700 MHz band for LTE. Tower congestion might be lessened with load balancing, and shared masts can lower cost.
The merger came as a complete surprise to most pundits (and Dailywireless). Wall Street has been fed rumors in recent weeks that Deutsche Telekom would sell its T-Mobile USA unit to Sprint Nextel.
The merger plan is expected to get scrutiny from regulators. If this deal goes through you can’t help but speculate how long it will take the other shoe to drop — Verizon and Sprint. Other CDMA operators that may be merger candidates include Leap Wireless (5.5 million subs), MetroPCS (8.1 million subs) and U.S. Cellular (6.1 million subs).
A Verizon/Sprint merger would leave just two big cellular operators — AT&T/T-Mobile with 130 million customers, and Verizon/Sprint with 152 million customers. Those combined companies might conceivably provide some 90% of the mobile services to the U.S.A., while a MetroPCS, Leap and US Cellular combination would total around 20 million subs.
An AT&T/T-Mobile merger would create 130 million subs with 145MHz of spectrum, compared to Verizon’s 102 million subs with 91 MHz and Sprint’s 50 million subs using 53 MHz (not counting Clearwire). Verizon, it seems, now needs more spectrum. Clearwire’s fate may be decided by cellular bosses. It’s headed for Palookaville.
What do consumers get? Less competition. Republicans will love it.