Will An AT&T Acquisition Of T-Mobile Really Happen?

A lot of T-Mobile subscribers are dreading the fact that AT&T has officially struck a deal with Deutsche Telekom to acquire T-Mobile USA for $39 billion. Heck, even Sprint is pissed off. But, while the companies have signed a definitive deal, it still has to be approved by the Department of Justice (DOJ) and Federal Communications Commission (FCC). This process can take up to 6 months or more.

Credit Suisse analyst Jonathan Chaplin called the acquisition, “phenomenal…if it happens.” According to Chaplin, the regulatory risk for such a deal is “enormous”. After the acquisition has been completed, it will increase AT&T’s subscriber base to 130 million, making it the nations largest wireless provider, while bumping down Verizon Wireless and its 95 million subscribers to second largest. Not to mention, the acquisition would also make AT&T a monopoly for GSM/EDGE/HSPA+ phones in the U.S.

While AT&T believes the acquisition will be approved by government regulators, in the event that it does not again approval, as part of the deal, AT&T has agreed to pay T-Mobile a $3 billion break-up fee, promised valuable spectrum and a roaming agreement.

“In the event the transaction does not receive regulatory approval satisfactory to AT&T and the transaction does not close, AT&T will be required to pay a breakup fee of $3 (billion), transfer to T-Mobile certain AWS spectrum that is not needed by AT&T for its initial LTE roll out, and provide a roaming agreement to T-Mobile on terms favorable to both parties”

So if you’re against this acquisition for whatever reason, you might want to pray to god the deal is not approved by regulators.

As for me, I kind of want to see how this turns out. I’m not totally against the idea of AT&T acquiring T-Mobile, but I’m not 100 percent for it, either. While I want better coverage, more options for handsets, I’m not so sure if that would be the trade-off for increased rate plans, data caps etc.

At the same time, if I had to choose between a merger with Sprint or AT&T, AT&T would most definitely be the better choice because of the technology differences between Sprint and T-Mobile. Things might have gotten really messy if Sprint had acquired our beloved Magenta.

So we ask our readers again, really think about both the positive and negative aspects of this acquisition, do we really not want this?

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  • Anonymous

    Do I want this? No. Why? Because I like what I have now, and t mo is improving it. I almost never loose coverage. The reason I was with Tmo originally was for the prices, this would just destroy this (most likely). Status Quo at Tmo = Good Status Quo at AT&T= Bad, this does a complete 180 for that

  • Neokid

    As a tmobile fan, writing this from a mytouch 3g slide, I LOVE tmobile and HATE ATT PRICES. Sure I’m 13 but my mom cussed out att when I was litlle and left. We had tmo ever since and we cannot swicth. I AM NOT TAKING THIS NONSENSE. TMOBILE SATY STRONG I’M PERSUADING MY SCHOOL TO GET THIS COMPANY. ATT SIIINKS

  • ja2bk

    But the alternative may be T-Mo lockin up shop and selling the licenses to someone anyway. Think about it. Now you know they don’t plan on staying. It’s just a matter of what do they get for their troubles. So, you can scream against it if you want, but let’s be real. They are going away one way or another.

  • Anonymous

    This was posted on Market Watch:

    BOSTON (MarketWatch) — AT&T’s move to take over T-Mobile USA is great news for stockholders. It will let AT&T shut down a competitor, jack up prices, and save on customer service.

    The news is also absolutely disastrous for everyone else.

    For exactly the same reasons.

    AT&T agreed to buy T-Mobile USA for $39 billion in cash and stock, in a deal that combines the No. 2 and No. 4 U.S. wireless carriers. WSJ’s Dennis Berman and Lauren Goode discuss whether the tie-up will pass regulatory scrutiny and who the winners and losers of the deal are.

    Write to your Congressman. Write to your Senator. Write to the Federal Communications Commission and the U.S. Department of Justice, both of of which must approve the deal.

    Tell them this takeover must not be allowed. No, not with conditions. Not with asset disposals. Not with commitments.

    It must never be allowed. Ever. No way, no how.

    The absolute bedrock of capitalism is competition.

    The whole essence of our free market system lies in consumer choice.

    That’s why it’s okay that companies charge what they like, and offer the products and services they like. Ultimately, if the consumer is unhappy, they can take their business elsewhere.

    Take away that choice and the consumer is powerless.

    Goodbye, free market.

    Hello, Cellphone Soviet.

    And this is a for-profit Cellphone Soviet, too. The worst of all possible systems.

    Two weeks ago, as it happens, I took my business away from AT&T. The reason? Simple. T-Mobile offered me a better deal.

    Lower prices.

    No two-year contract.

    And monthly savings because I brought my own phone.

    It was a free market. So I moved.

    Little did I realize that AT&T is the California Hotel of the wireless world. You can check out any time you like, but you can never leave.

    What’s going to happen to some of these great T-Mobile features after AT&T takes it over? Listen to AT&T chairman Randall Stephenson. This weekend he said AT&T “will look hard” at whether to continue them.

    Gee, I wonder what that means?

    Don’t think this deal won’t affect you if you aren’t a T-Mobile customer.

    The presence of a fourth player in this industry helped keep the other three at least semi-honest.

    If you think they’re arrogant now, just wait till they’ve cut this cozy club down to three.

    After this deal, they will do to you exactly what they like. Count on it.

    Oh, and get ready for “merger misery.” These deals are always bad for the consumer.

    Think of Sprint and Nextel.

    Think of FedEx and Kinko’s.

    I remember when all the online brokerage firms were merging. As a customer I went through three mergers in about two years. Each one was a disaster. At one point their computer systems got so screwed up they lost some of my files.

    Transaction reports. Tax records. Minor stuff.

    The CEO didn’t care. Why should he? He had his mind on just three things: Stock options, stock options, and stock options.

    You think AT&T’s Stephenson’s any different? His customers have been miserable for years, yet in the past three years he’s pocketed an incredible $72 million.

    No kidding, $72 million, while his stockholders actually lost money.

    Unbelievable. Imagine what he would have made if his stockholders had made a profit!

    Defenders of this deal, like the flacks and their patsies in the press, will have their talking points ready, of course.

    “We won’t be eliminating competition,” they’ll say in reply. “After all, you can still move to Verizon or Sprint.”

  • Anonymous

    Remember yesterday and today I said the vast majority of articles, commentary, editorials and comments on blogs were against AT&T’s acquisition, well I have changed my opinion on the liklihood of this deal getting government approval. I now say that there’s a 75% chance govt. regulators and/or Congress will NOT rubber stamp the sale.

    Truth be told, I am astounded at the degree of opposition and number of articles/editorials published bad mouthing the marriage (hmm… more like AT&T is getting a mail-order bride).

    Anyway, here’s another great article from today, Monday March 21; it nicely lays out each the arguments for and against the sale:

    “AT&T’s planned $39 billion merger with T-Mobile USA could draw considerable scrutiny from antitrust regulators and lawmakers who are already keeping a close eye on increased consolidation within the wireless industry.

    Congressman Ed Markey (D-Mass.) has called for hearings on the deal. Markey, a senior member of the House Subcommittee on Communications and Technology, said in a statement that he intends to evaluate the merger for its effect on “consumers, competition and choice.”

    “While AT&T and T-Mobile have determined that the merger is in their corporate interests, it must also be in the public interest,” Markey said. “We should hold Congressional hearings to fully assess the effects of this proposed merger, and I look forward to actively participating in them with my colleagues.”

    Sprint is also asking the FCC and Department of Justice (DOJ) to look into the deal.

    “If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80 percent of the U.S. wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete,” Sprint said in a statement. “The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the U.S. economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry.”

    AT&T may be required to divest assets or spectrum in certain markets to alleviate antitrust concerns and could be forced to agree to limit device exclusivity arrangements and near-term price hikes on wireless services, analysts say.

    “If history is any indication, the combined entity is likely to be forced to divest its positions in markets where it either has more than 50 percent market share in terms of subscribers or where it has a spectrum position that could be viewed as anti-competitive,” says PRTM Director Dan Hays, who gives the deal a 50 percent chance of getting approval.

    AT&T is the second largest carrier in the country and T-Mobile is the fourth largest. When combined, AT&T and T-Mobile would become the largest carrier in the country, surpassing Verizon Wireless, which has 94.1 million customers. AT&T has 86.21 million wireless subscribers, excluding connected devices. T-Mobile has 34 million subscribers.

    AT&T will likely face similar divestiture requirements as Verizon Wireless did when it acquired Alltel in 2008, Hays says. Verizon was forced to divest 2.1 million Alltel customers in 105 markets to get FCC and DOJ approval for that deal. Hays also says that the FCC may use the merger as a way to force AT&T to concede to net neutrality regulations for its wireless services, which are largely exempt from its current open Internet rules, as well as possible limitations on device exclusivity deals, which rural operators have long targeted as anti-competitive.

    AT&T alluded to possible regulatory hurdles in the announcement of the deal. The company called the U.S. wireless industry “one of the most fiercely competitive markets in the world” and said it “will remain so after this deal.”

    AT&T cited a report showing that there are at least five wireless providers in 18 of the top 20 U.S. local markets, as well as research from the U.S. General Accounting Office (GAO) which found the inflation-adjusted average price for wireless services declined 50 percent from 1999 to 2009. Five major wireless mergers occurred during that 10-year period.

    However, reports from the FCC have been less optimistic about the state of competition in the wireless industry. Last May, the FCC found that the wireless industry was getting less competitive in its annual Mobile Wireless Competition Report.

    Analyst Mark Lowenstein believes deal between AT&T and T-Mobile will pass, but might require the FCC and DOJ to re-evaluate the way they look at competitiveness in the wireless industry.

    “If they look at it through the historical prism of how they look at wireless – the number of vendors, competition in each market – they might have some difficulty with it. I really think the DOJ, which will rely on the FCC’s findings, has to change its thinking about what the wireless industry is,” Lowenstein says. “It’s not just about mobile services – it’s about mobile computing devices and the growth of data in the network. In the current structure, it’s been very difficult for operators to achieve [growth] despite the amount of money spent on CapEx.”

  • AdrianG2

    Cincinnati Bell $60/month prepaid smartphone plan. Can’t beat that!

  • P Loco01

    This is not gonna be good if it is approved.There is no positive side for tmobile users we get higher planes less min and the big thing will be “no more unlimited data”planes. Those are the main reasons tmo customers are with tmobile, plus the no. 1 customer service. My brother has as&t and there customer service is not that good. plus they are still behind on 4g service.I use a Galaxy S 4g with at&t i will probly be spending over $70 just for data usage’ so what good is that with everyone using smart phones now.

  • AdrianG2

    Oh yeah, the iPhone in the T-Mobile commercial said it best “Sometimes, you haave to pay more for less”. This applies here nicely.

  • Anonymous

    Excellent commentary and analysis from the Wall Street Journal. Chalk up another in the “Against Acquisition” column. LOL.

    ____________________

    “To hear tell from AT&T, the company’s proposed $39 billion purchase of T-Mobile USA is a boon for
    Americans and their country.

    Sure, it removes an innovative, low-cost carrier from the wireless market and leaves America with essentially three big wireless-telecoms.

    Sure, it raises the prospect of higher rates and fewer choices for consumers.

    But it will speed and broaden AT&T’s deployment of next-generation 4G wireless service.

    And it’s a victory for America. As AT&T observed in its press release announcing the acquisition, the deal “makes T-Mobile USA, currently a German-owned US telecom network, part of a US-based company.”

    Such morally admirable altruism and patriotism. But few, it seems, are buying it.

    On Sunday afternoon Sen. John Rockefeller (D-W.Va.), chairman of the Commerce Committee, urged “both the Department of Justice and the FCC leave no stone unturned in determining what the impact of this combination is on the American people.”

    A few hours later, Sen. Herb Kohl (D-Wisc.), chairman of the Senate Antitrust, Competition Policy and Consumer Rights Subcommittee, promised a hearing on the deal. “The explosion of cell phone usage – especially smartphones – makes competition in this market more important than ever as a check on prices, consumer choice, and service,” Kohl said in a statement. “That’s why the Antitrust Subcommittee will take a close look at what this loss of competition will mean for people who increasingly rely on wireless phone service to connect to friends, family and the Internet.”

    Consumer groups echoed those concerns, with Public Knowledge president Gigi Sohn calling the combination of America’s second-largest wireless carrier with the fourth-largest “unthinkable” and Bert Foer, president of the American Antitrust Institute, reminding us of AT&T’s monopolistic past.

    “AT&T was broken up and now it’s back with a vengeance,” he said. “We have to decide if we’re happy with the idea of going back to monopolistic treatment of the telecom industry. AT&T has come back to monopolistic power just like the Terminator.” A colorful analogy and one which I’m sure will irk AT&T to no end. But Foer’s point is well taken.

    The wireless business is becoming more concentrated; the Federal Communications Commission said as much in its last Mobile Wireless Competition report. “One widely-used measure of industry concentration indicates that concentration has increased 32 percent since 2003 and 6.5 percent in the most recent year for which data is available,” the agency concluded.

    Thing is, the FCC didn’t say that there wasn’t effective competition in the market. Which is perhaps why AT&T seems so confident it will get regulatory approval for the deal. “This is probably the most fiercely competitive wireless market in the world,” AT&T CEO Randall Stephenson told The Wall Street Journal. ‘The majority of Americans have the option of five different wireless carriers.’”

  • Pirana

    Well, I respect every ones opinion sad to say that u may not like att or tmobile , fact is the merge is going to happen ,the FCC will make things a little interesting but at the end att,tmobile and of course FCC will benefit themselves, Just let u know that tmobile started working with customer serv and sales with the system they use with att systems since 2010. I wonder why?..now in regards tmobile customer and their rate plans, Att will do the same as tmobile did when tmobile bougth suncom in puerto rico , gave the customers the option to keep their same plan ,but here’s what ATT will do . Customer will have the option to keep their plans and any additional features they have ,but here is where they’ll get customers into changing to att plans ,remember tmobile phones will no longer be available which means customers will have to do an upgrade and since their getting an ATT phone customers will have no option but to change their tmobile plan to att plan (what a deal uh) ATT will no obligate tmobile customers to change their plan but if u want their new phones eventually you’ll have to . So as far as having systems issue I doubt it do to tmobile already using att systems. Now I feel bad for tmobile customers since tmobile always was concern with their customer service level and worked hard to get the JD Power . ATT does not care about their customer service , so glad to say that tmobile employees will not have to take anymore crap from does rude customers that thought that tmobile was expencive. Now I see tmobile customers are complaining after saying tmobile is expencive and saying ( I going to att cause their cheap) jajajaja tmobile customers get what they deserve

  • Anonymous

    NO! David we do NOT! absolutely not.

  • http://twitter.com/wrg25 W!LL

    GOOGLE should BUY T-Mobile USA………. that’s it……

  • Merger of equals?

    Being a former DaimlerChrysler employee I can tell you that you are all underestimating the Germans and so has AT&T. Deutsche Telekom is probably already planning how to spend their $3 Billion and use the spectrum they will get from AT&T when the deal doesn’t go through.

    • P Loco01

      Well i bet a lot of us are hoping that is the truth.

    • OOpsie

      This would be the funniest thing ever. I suspect if this doesnt go through that DT will eventually just spin off Tmobile USA to its own entity or IPO it and use the extra 3 billion to cut costs. You’re right though I wouldnt underestimate the Germans, all the extra perks Tmo gets if this doesnt go through should be looked upon with greater emphasis, It really seems like DT feels this deal has a good chance of not going through. We all have the ability to write to the FCC and DoJ and express our opinions. Ultimately these people answer to us.

    • OOpsie

      This would be the funniest thing ever. I suspect if this doesnt go through that DT will eventually just spin off Tmobile USA to its own entity or IPO it and use the extra 3 billion to cut costs. You’re right though I wouldnt underestimate the Germans, all the extra perks Tmo gets if this doesnt go through should be looked upon with greater emphasis, It really seems like DT feels this deal has a good chance of not going through. We all have the ability to write to the FCC and DoJ and express our opinions. Ultimately these people answer to us.

  • Anonymous
  • Don Juan

    This acquisition is very interesting!!! For one the coverage for voice and data would be very competitive with Verizon and would give AT&T customers a great value. But if this deal goes through I am scared that the plans and cost of phones will probably go up in the long run and control the market. On the other hand this deal this going to take some time to go through, DOP and the FCC has to approve this. With elections coming up around the corner and dealings with politics I would say this deal MAY NOT happen. Don’t be surprised if this deal doesn’t go through!!! I have been through two different mergers and when it’s said and done your not going to satisfy everyone!!!

  • The_spineless

    AT&T will have a monopoly on the GSM spectrum. The FTC blocked the merger of DirecTV and DishNetqork because would have had a monopoly on satellite TV. I seriously hope the FTC blocks this merger because no one, other than AT&T and T-Mobile shareholders, would benefit from this.

  • Anonymous

    FCC, Just make them keep my Prepaid monthly plan price forever and we are good.

  • Robert

    David, you’re a tool. You’ve always been a tool. You say you’d rather merge with AT$T over Sprint, just shows that you don’t know crap about the industry or what this merger with the devil will mean. Glad I jumped ship months ago and went with Sprint and will be paying hundreds less a year than all you T-Mo.. errrrr… AT$T losers. Bwah ha ha ha.

  • Jason

    No, AT&Tmobile is a bad idea. One step closer to a duopoly. If this get’s approved (let’s face it, AT&T wines and dines government officials, it will), then Verizon will have to answer back with an attempt at Sprint. How can that be denied if AT&Tmobile wasn’t? AT&T was shitty to consumers and competing companies as a monopoly decades ago, and it will happen again. I am still 100% certain that the day this deal goes through is the day I cancel my contract with TMo.

  • Ex AT&T

    No we do not want it

  • tell

    MA BELL IS BACK!!! It was no good 30 years ago and its not good now.

  • Dallas

    Kickstar13… NO we really DO NOT WANT THIS!!!!

  • Anonymous

    AT@T will not have a monopoly of GSM if this deal is approved. Resellers like Straight Talk and Net10 use the AT@T towers for their GSM phones. The regulators should ensure that, if the deal goes through, the resellers still have access to the network, as they offer huge competition to the contract companies like AT@T. In fact, by far the cheapest option for GSM is from Straight Talk and Net10.

  • Andrup502

    dont like the deal its not final contact the fcc at fccinfo@fcc.gov

  • http://twitter.com/DogoJosho Josh Garrett

    Eh, it could either be bad or good, we’ll just have to see. I hate AT&T with a passion but maybe they’ll pick up some Magenta ways post-merger.

  • Solidus79

    Speaking as a former employee of AT&T you most certainly do not want this merger to happen. AT&T fails miserably as a company and puts its horses before the cart with continual screw ups with both data and voice coverage. Let us not mention their deplorable customer service. Only in America are we forced to deal with and choose from only a handful of providers.

  • Anonymous

    There is no way in friggin hell that merging the worst company with the best company will be in any way good for customers. All big corps are just getting bigger… big oil, big pharma, big banks, and of course big brother.We haven’t had a free market for over 100 years, since progressives infiltrated politics and sold themselves to industrialists. This experiment will not end well.

  • None

    This will be a DISASTER!!! I moved five phones from AT&T to Tmobile four years ago because of the HORRIBLE AT&T customer service. On two separate occasions, AT&T miss-billed by hundreds of dollars and it took 6 months of hours of phone calls to finally get it rectified!! If this goes through, I will move to Verizon or Sprint!

    • Tmobilemom

      I am looking at this merger from the perspective of the Tmobile employees and their families.
      My son has not been given much information related to the merger, he is working at a Tmobile store that normally sees many customers. No one is coming into the store now because of the news. They can not close a sale on new service. Now, they are told that if they do not meet their quota, they will be fired. How unfortunate. So does this mean they can not file for unemployment? Or get a severance package when they loose their job?? My son loves his job and was excited to work for Tmobile. I am sad for the employees! Please Att/Tmobile do right by your employees.

  • Rohith76

    Having just one carrier with GSM will create a monopoly. I think the regulators should stop this. Monopoly is never good for people.

  • Tharlainmhar79

    what happen to all the t mobile now?  july 01, 2011 @ 12 44am. my phone was disconnect. what is happening?

  • Jb

    att better fucking lower there prices if it happens or ill be pissed