Speculation over the implications of AT&T’s buyout of T-Mobile has been dinner table conversation among the mobile industry’s movers and shakers for a few months now. But has the deal completely fallen through? Eddie Ringle reports:
Late last night, AT&T announced that it had withdrawn its T-Mobile takeover applications to the FCC. While both AT&T and Deutsche Telekom (T-Mobile USA’s parent company) have stated that they “[continue] to pursue the sale of Deutsche Telekom’s US wireless assets to AT&T,” AT&T has prepared a $4 billion loss in its accounting books when the deal falls through completely.
The deal is hanging on by a thread, with AT&T dropping any dealings with the FCC at the moment in order to concentrate its efforts on gaining the Department of Justice’s approval. However, an FCC official stated Thursday that “the record clearly shows that — in no uncertain terms — this merger would result in a massive loss of US jobs and investment.” With strong disapproval from the FCC, hope for AT&T to pull through with this deal looks very slim indeed.
So, what happens next? Deutsche Telekom clearly wants out of the US market, so it will most likely still pursue a buyer. Word from the rumor mill hints that Vodafone — which currently holds a significant interest in Verizon — is interested in making an offer. In fact, Vodafone had an offer on the table months ago, before AT&T entered with its massively overpriced $39 billion proposal. In reality, we could see any number of carriers making a deal to buy T-Mobile, save from the other big four carriers of course, as the FCC has made it clear that having only three major carriers dominating the US market would hurt the consumer big time.
Another possibility is that Deutsche Telekom will simply sell off its T-Mobile assets piece by piece until T-Mobile ceases to exist. I, for one, hardly see this as an outcome, as T-Mobile is still a profitable company. Deutsche Telekom is not losing anything by holding on to T-Mobile, so it makes sense that it would rather pursue a buyout instead.
What is for certain, though, is that Deutsche Telekom will be receiving a cool $4 billion from AT&T when the deal falls through. $3 billion in cash and $1 billion in spectrum access to be more precise. Most people jumped the gun and assumed that the assets would be spent towards improving T-Mobile’s network. I wouldn’t put it past Deutsche Telekom to pocket the money or spend it improving things over in its home market, however, especially considering the stunts it’s been pulling to make T-Mobile look like it is in bad shape (laying off highly valued CSRs, for example).
Following this news, a few rumors popped up in regards to T-Mobile receiving the iPhone (again). However, this time the logic seems to make some sort of sense. With T-Mobile in danger of being acquired by AT&T, it would be silly for Apple to invest heavily in providing phones compatible with T-Mobile’s network. Of course, now that the deal is virtually dead, perhaps we will see T-Mobile sporting the iPhone sometime soon. There is no other reason Apple has for not signing a deal with T-Mobile, especially after providing iPhones to C Spire Wireless, a carrier with a significantly smaller subscriber base (T-Mobile’s 33+ million vs. C Spire’s 900,000).
I don’t doubt we’ll see T-Mobile seriously rebound in some shape or form. They are seeing a renewed vigor in the form of new prepaid customers, which attributed to T-Mobile’s slight increase in revenue last quarter. We should also consider the vast number of customers who dropped T-Mobile for Verizon or Sprint in fear of the merger who will most likely be returning. I personally expect the bad air surrounding T-Mobile (mostly due to AT&T and Deutsche Telekom’s meddling) to dissipate quickly. Soon, it can be hoped, T-Mobile will go back to being the carrier we all know and love.
Despite what happens next though, the fact that AT&T is essentially out of the running to buy T-Mobile is great news for everyone. T-Mobile customers (including me) don’t have to worry about losing our amazing devices due to incompatibilities with AT&T’s network. Sprint doesn’t have to worry about being gobbled up by Verizon. Most important, consumers get a guarantee that choice will remain in the wireless market.