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What happens now to T-Mobile?

tompalm

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AT&T drops bid for T-Mobile. So, will T-Mobile continue. They have been cutting service and cost since this deal started. Will they break up and sell off the pieces?

http://www.usatoday.com/tech/news/story/2011-12-19/att-tmobile-merger/52076342/1


LOS ANGELES – AT&T is bowing out of its $39 billion bid to buy smaller wireless provider T-Mobile USA after the U.S. government tried to block the deal over concerns it would raise prices, reduce innovation and give customers fewer choices.

Monday's announcement came as little surprise after the Justice Department sued to block the merger on Aug. 31. The deal looked further in jeopardy when the Federal Communications Commission's chairman also came out against it. The companies withdrew their FCC application last month.
Bernstein analyst Craig Moffett said the announcement was "a bit of an anticlimax."

"This is like receiving the divorce papers for a couple that's been separated for years," he said.
AT&T's purchase of T-Mobile from Deutsche Telekom of Germany, announced in March, would have made it the largest cellphone company in the U.S. T-Mobile is currently the fourth-largest.

AT&T, the nation's second-largest wireless carrier behind Verizon Wireless, will now have to pay Deutsche Telekom $3 billion in cash as a breakup fee and give it about $1 billion worth of airwaves, known as spectrum, that AT&T doesn't need for the continued rollout of its high-speed "4G" network.
It will also enter into a roaming agreement with Deutsche Telekom so that AT&T's and T-Mobile's customers can use each other's networks.

AT&T will book the $4 billion charge to its earnings in the fourth quarter.
In pulling out, AT&T said the government's attempts to block the deal do not change the challenges of the wireless phone industry, which has been clamoring for more airwaves to expand.

The company said the deal would have solved that problem for a time, and without it, "customers will be harmed and needed investment will be stifled." It called on the government to quickly approve its purchase of unused spectrum from Qualcomm Inc. and come up with legislation to meet the nation's long-term needs.

Many people, however, believe that AT&T had overstated the spectrum crisis.
AT&T already has an ample supply of unused wireless spectrum that it plans to use to expand its network over the next several years. And much of T-Mobile's spectrum is already in use, so the deal wouldn't have resulted in fresh airwaves becoming available. Furthermore, AT&T has made great strides in addressing network congestion in such cities as New York and San Francisco not by tapping its unused spectrum, but by upgrading its cell-tower equipment.

Moffett said AT&T's spectrum needs are not so grave that it needs to make a large acquisition right away.

AT&T could acquire airwave space through a possible spectrum auction through the FCC or by buying spectrum from satellite cable operator Dish Network Corp., which could require an FCC waiver.
The decision to end the bid could be a bigger problem for T-Mobile than for AT&T. Deutsche Telekom has been eager to sell T-Mobile and isn't keen on investing more in the company, which has seen revenue decline slowly with the flight of higher-profit contract customers.

Still, Moffett believes it's too soon to write off T-Mobile, saying it has a good network with lots of room for more customers.

"I think they could surprise some people and be a more important force in the market than people are giving them credit for," he said.
AT&T's stock fell 20 cents to $28.54 in after-hours trading Monday after closing the regular session down 11 cents.
 

T_R_Oglodyte

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From what I understand, T*Mobile is dead in the water.

They don't have the capital available to build out a 4G network. The assets they have are their bandwidth and their subscriber base.

From the time the AT&T acquisition was announced there has been speculation that the Sprint's goal was to scuttle the AT&T deal so that Sprint could pick at the carcass, and that's what's likely to happen. The exact method by which that will occur isn't clear - whether Sprint as Sprint will make a play or whether Sprint will have it's affiliated operations (like Virgin) slice away hunks.

***

If I had to guess, it's that T*Mobile will shrink and what remains will become a low cost second tier cell phone company along the similar to Virgin or AllTel or Virgin.
 

timeos2

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T Mobile & AT&T were the perfect fit - the two worst services combined to form the absolute worst of the worst!

Verizon & Sprint (with Verizon the clear winner) fight it out to be top dog in the most recent rankings from Consumer Reports. But the bottom dog - AT&T is constant. And so is the second worst T Mobile. At least they are consistent. How can AT&T advertise that they are "fastest, have most coverage" etc when it is painfully clear they don't make the grade? False advertising to rival timeshare sales I guess.

Having tried most of them in my experience Verizon may have problems but overall it is by far the cream of the cell phone provider crop. Sprint may be second but it's a big drop from #1.

Glad to see the AT&T merger got scuddled. It was never a good idea for competitive reasons. I hope no one got roped into a two year T Mobile contract recently.
 

tompalm

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T Mobile & AT&T were the perfect fit - the two worst services combined to form the absolute worst of the worst!

Glad to see the AT&T merger got scuddled. It was never a good idea for competitive reasons. I hope no one got roped into a two year T Mobile contract recently.
I still have a year left on my contract with T-Mobile and the service got a lot worse after the AT&T deal started. I just hope that it doesn't get any worse and they keep supporting the network and customers. I will bail as soon as my plan is up. Twelve months to go and counting.
 

T_R_Oglodyte

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I still have a year left on my contract with T-Mobile and the service got a lot worse after the AT&T deal started. I just hope that it doesn't get any worse and they keep supporting the network and customers. I will bail as soon as my plan is up. Twelve months to go and counting.
Not at all surprised. When the deal was announced there was a massive outflow of talent from T*Mobile. AT&T made clear that most of the existing T*Mobile HQ staff were considered redundant with AT&T staff and all of those positions represented cost savings. Not surprisingly the most talented people were the ones who found it easiest to find other employment and they left as soon as they had any offer that looked better than the retention bonuses that were being dangled.

T*Mobile current business strategy has been to be the low-cost primary cell phone service provided. But they've already captured most of the market for people for whom the lower price is worth the crappier service. Now when they roll-out newer low cost plans, all that happens is that their own customers roll over to the new plan, giving them little additional market penetration. They get some top line growth but the net drops as customers move migrate to the new plans that have lower overall margins.

That's why T*Mobile is a dead man walking. They can't compete on quality because they don't have the network, being the low cost provider isn't a viable strategy, and because they're not viable they can't attract the capital to build service and get out of their death spiral.
 

Elan

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Google and Dish Network have been mentioned as possible suitors. I'd love to see Google buy T-Mo.
 
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