AT&T/T-Mobile Merger: Unlikely?

Posted by Sam Churchill on

When the proposed AT&T/T-Mobile USA merger for $39bn was announced in April, many industry analysts thought it was a done deal. AT&T was so confident, it agreed to pay a break up fee of $3bn in cash together with another $3bn-$4bn in other assets including spectrum.

The merger may be in trouble, writes the Financial Times. On August 30, the US justice department filed an antitrust suit to block a deal that would have created a new mobile industry market leader in the US with more than 130m subscribers. That 43% market share would place it ahead of Verizon Wireless (31%), and Sprint (16%).

One might speculate what would be next — Verizon would have legal precedent to buy Sprint, creating a duopoly dictating service for more than 90% of the United States. A Verizon/Sprint merger might control a 47% share while AT&T/T-Mobile would control 43%.

But T-Mobile is already using most of their AWS spectrum. Since AT&T would have to buy new spectrum anyway, many questioned the benefits of the $39 billion deal. Eliminating competition seemed to be the main goal — AT&T stockholders wanted to see 47% profit margins like Verizon Wireless.

Today most analysts think there is a less than 50:50 chance that the deal will be completed, unless significant concessions are made. Some only give the deal a 20 per cent chance of completion, reports the Financial Times. Deutsche Telekom is bound by the “best efforts” terms of the deal to neither discuss the possibility of a “Plan B” nor pursue alternative negotiations with any third party.

The merger is now facing challenges from the free market.

Dish Networks, cable operators, and even companies like Apple and Amazon are reportedly looking for partners — and T-Mobile may soon have billions more in settlement fees.

The merger seemed doomed from the start. Their plan looked like pure hubris. Any kid could blow holes in it.

Related Dailywireless articles include; Plan B for T-Mobile?, AT&T Defends Jobs Claim, AT&T Looking To Sell Spectrum?, Merger Salvage Plan by AT&T, AT&T: Selling Assets for Merger Approval?, DOJ Blocking AT&T/T-Mobile Merger, AT&T Merger: More Heat, AT&T Merger: Yea & Ney, FCC Receives Pro & Con Support for ATT Merger, LTE Spectrum: It’s War , Spectrum Drama: Made for TV, FCC: Show Us Your Spectrum Scarcity, AT&T, Phoney Spectrum Scarcity, AT&T Gets Heat on MediaFLO Spectrum, U.S. Wireless Growth, AT&T Declares Spontaneous “4G” Transformation, Consumer Groups Fight AT&T Merger, Traffic Forecast: Congested, Combining AWS and 700 MHz: Why?, T-Mobile’s Secret Sauce: 2x10MHz, AT&T Merger: Yea & Ney,

Posted by Sam Churchill on Monday, November 21st, 2011 at 9:40 am .

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