Quantcast

The AT&T/T-Mobile Merger Fail: The Next Day

Questions, regrets, loss of dignity, hangovers and other travails of the morning after

Get the WebProNews Newsletter:
The AT&T/T-Mobile Merger Fail: The Next Day
[ Business]

Now that AT&T has begun its walk of shame after failing to add T-Mobile as the latest notch in its belt, today is for people to reflect on what could have been and speculate on what will be.

Henry Blodget, Editor-in-Chief of Business Insider and Glenn Beck fan, has called the U.S. government’s denial of the merger “absurd” and doesn’t really see what the big deal would have been to have three major carriers instead of four.

So why was it even a big deal?

If you recall, nobody was really digging on the prospect of the AT&T/T-Mobile merger. The DoJ wasn’t down, the FCC wasn’t down, and other wireless carriers weren’t down. Add to that brigade the fact that, of the four major cellular providers in the U.S., AT&T customers are the least happy about their service and you’ve got a whole lotta people very unexcited about this acquisition.

One of the factors the FCC cited in its opposition to the creation of a AT&T-Mobile hydra was that such a merger would result in “the top two wireless providers having a market share of approximately 75 percent.” That sounds like a lot, but honestly, it wouldn’t have changed much from how the landscape currently is. As of the third quarter of 2011, AT&T and Verizon share 66% of the total carrier subscription shares (this is according to Chetan Sharma Consulting). Had AT&T swallowed T-Mobile’s share, the result would have left AT&T with approximately 42% and Verizon with 34%, topping out at around 76% of the total market. AT&T would’ve been the largest wireless provider in the United States by quite a bit, leaving Verizon at the number two spot and Sprint in a distant third (they have 17% of the market). Again, not a huge shift, but a shift nonetheless.

What’s interesting here is that Sprint had actually expressed interest in merging with T-Mobile before AT&T cut in. A Sprint/T-Mobile deal would’ve created a third carrier that staked 27% of the wireless. While that’s still far behind the take of Verizon and AT&T mobile, it’s still a much more evenly portioned pie than the one that an AT&T-Mobile merger would’ve served up. That’s not exactly optimal either because that still leaves the top two wireless businesses in control of most of the market, but at least Spring could remain competitive in that landscape.

In the former scenario that leaves almost 3/4 of U.S. consumers under the umbrellas of AT&T and Verizon, we basically get a two-party system of wireless providers. Having said that, I’m not even going to get into the vexations and limitations that result from a two-party system and what toll that model takes on the fluidity and progress of society in the United States.

The FCC report also didn’t find any reliability in AT&T’s claims that “merging with T-Mobile is essential for AT&T to built out its LTE network to 97 percent of Americans” and that AT&T’s “assertions that the transaction would create jobs in the United States to be inconsistent with AT&T’s internal analyses and record statements concerning cost reductions from the merger.” Basically, no better cell phone service and not good for jobs. What’s the point, in other words?

The one question that AT&T failed to answer sufficiently is The Why. Why did they want to acquire T-Mobile so badly? According to Chetan Sherma, they say that AT&T has 43% of the connected device share of the market. That’s a pretty hefty bite but maybe AT&T’s eyes were bigger than its stomach. Or it bit off more than it could chew. Or whatever gastrointestinal metaphor you want to apply.

Honestly, I don’t think AT&T make a good case to the DoJ and FCC. Buying out a major competitor is a lot different than the deliberation involved in buying the Lord of the Rings BluRay box set during an unexpected late night trip to Walmart. This merger had big ramifications that AT&T didn’t address clearly enough. As a result, they lost millions of dollars and they don’t get their T-Mobile in the end. It doesn’t have anything to do with consolidating U.S. business onto U.S. soil. And nobody forced AT&T to pursue this merger. It’s a simple case of AT&T handling this acquisition poorly. Analogously, I doubt I’d be approved for a loan of $2,000,000 if I strolled into the bank, asked for the loan and when the bank asked me why I wanted to do it I simply shrugged gormlessly and droned, “B’cuz.” No, I’d be denied, because I’d need a pretty air-tight argument to get approved. But that’s what I gather AT&T’s merger playbook looked like. Since Blodget doesn’t think AT&T needs to make a solid case for the acquisition, maybe I should just ask Blodget for my loan of $2 million since he’s so relaxed.

In the editorial I linked above to Blodget’s piece in Business Insider, he can quote stats just as well I can here but in the end it doesn’t really change anything. None of this matters. Nothing is preventing AT&T from making a second attempt at acquiring T-Mobile because, like I said, I don’t really see it drastically changing the wireless landscape. And truthfully, they’ll probably find a way to win in the end anyways so, again, this defeat to AT&T doesn’t matter. They’re just butt-hurt right now and, well, that’s to be expected.

Don’t be surprised if they go home for the holidays, polish up their act, and then make another run at T-Mobile next year. Chances are this defeat has showed them that you can’t be a lazy suitor when you’re gunning for a major conquest.

The AT&T/T-Mobile Merger Fail: The Next Day
Comments Off
Top Rated White Papers and Resources

Comments are closed.

  • Join for Access to Our Exclusive Web Tools
  • Sidebar Top
  • Sidebar Middle
  • Sign Up For The Free Newsletter
  • Sidebar Bottom