Here are a few thoughts on winners and losers after AT&T cancelled the T-Mobile merger.
Consumers are big winners. They will keep T-Mobile as part of the competitive mix. T-Mobile has a slice of the pie who want what they offer. Less wireless data, but lower prices. That is what many want. Merging with AT&T would have taken this competitor out of the mix. Keeping T-Mobile will also keep the downward pricing pressure on the market.
AT&T was going to be the only winner if the merger took place. Now that it has failed everything is reversed. AT&T is the big loser with this result, but all is not dead for Ma Bell. They just have to take a different path. Coughing up $3 billion in cash and $1 billion in spectrum will be very painful. This showed that AT&T had no doubts. They were wrong. The marketplace has changed. This is the first merger that regulators denied. Other deals will be approved, but others will also be denied. This is very likely the last time we see such high break-up fees.
AT&T has other ways to solve their spectrum problems. They can acquire spectrum from other companies like Verizon did last week with the cable television industry. If AT&T changes their direction, they can solve their problems.
AT&T should not take this personally. I don’t think regulators would have approved a Verizon T-Mobile deal either.
T-Mobile is in much better shape after this event since they have an additional $3 billion in cash and $1 billion in spectrum. They are behind the eight ball compared to larger competitors. They are in the same trap as other carriers. Little spectrum.
This is a brewing problem the industry must solve. Every carrier must have access to spectrum or they will start to go out of business.
Over the next three years wireless data is supposed to account for 97% of network usage. Voice will only be 3%. If that is the case every carrier needs access to spectrum or they will die. Period. This is a serious problem we must fix, now.
Sprint Nextel is a winner, short term. Their CEO Dan Hesse became one of the big anti-merger advocates. That generated allot of followers.
The problem with Sprint Nextel is they are not winning new business the same as Verizon and AT&T. They have a serious problem. Perhaps they will acquire T-Mobile. That would be approved. That would help turn this two way race into a three way race. The future for Sprint is uncertain.
Verizon was not directly involved with this AT&T merger, but they are still a winner. AT&T is in a weakened condition. They have not focused on building relationships with their customers and workers. AT&T’s spectrum problems are causing more of a problem.
AT&T and Verizon had been on similar paths, until recently. Now it seems Verizon is expanding while AT&T is struggling. Verizon is getting the spectrum from the cable television industry and they are planning on getting into the Netflix type business. Perhaps they will even acquire Netflix. This is expansion. Something that we don’t see from AT&T at this time as they struggle for more spectrum.
Other spectrum owners look like they will be winners. Just like Verizon acquired spectrum from the cable television industry, there will be lot’s of other companies who are holders of spectrum that will be happy to sell to the highest bidder.
Which raises another question, why didn’t the cable television industry put their spectrum up for auction to the highest bidder? Why did Verizon get it so quickly and easily and quietly? I don’t have an answer, but this is an interesting question.
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Please attribute to Jeff Kagan, Tech Analyst with www.jeffKAGAN.com
If you would like to discuss, call me at 770-579-5810 or send an email to jeff@JeffKAGAN.com
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Jeff KAGAN| Tech Analyst w Atlanta based jeffKAGAN.com
Analyst sharing perspective on the changing industry for 25 years
~ Also Columnist, Author, Consultant, Speaker
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Contact InformationJeff Kagan
Title: Tech Analyst ~ Wireless Industry Analyst ~ Telecom Industry Analyst
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