One group of folks expecting bad news come the passing of the AT&T/T-Mobile merger are the third party dealers amongst a Wall Street Journal reports that 9200 AT&T and T-Mobile stores exist nationwide with around 41% of AT&T stores having a T-Mobile store within one mile. AT&T has unsurprisingly said that a portion of their cost savings will come from “rationalizing real chains, advertising and back-office systems are a big part of the deal’s rationale.”
While AT&T has said they look forward to working with T-Mobile’s independent dealers “in a manner that is mutually beneficial” Wall Street analysts expect consolidation especially in areas where stores are only a few miles apart.
The Wall Street Journal tasked real-estate research firm CoStar Group Inc to track down the locations of every AT&T and T-Mobile store nationwide. Their study found that 41% of AT&T’s stores have at least one T-Mobile store right around a mile away. The overlap is greatest in the west, especially in Denver, Salt Lake City, Phoenix, Las Vegas and Los Angeles where the one-mile distance is most likely to occur. For their part T-Mobile says it is still planning on expanding and adding over 200 stores run by independent dealers this year and has offered to sign the leases helping those locations avoid some of the risk. T-Mobile currently runs 2,000 company-owned stores with 1,100 branded partner stores against AT&T’s 2,300 company-owned locations and 3,800 independent ones.
Smaller dealers are right to fear for their future considering AT&T’s existing relationship with third party retailers with plenty of businesses expected to be left in the cold. However, not all T-Mobile dealers see the AT&T deal as bad news, instead seeing opportunity with the influx of a huge new customer base they can tap provided AT&T is willing to work with larger sized independent retailers. Todd Heiner, owner of Express Locations LLC which currently operates over 80 locations in nine states believes a company of his size would fare well. However Mr. Heiner understands that a company operating just five stores would be unlikely to see the same considerations as his company.
Doug Chartier, T-Mobile’s senior vice present for nation accounts and business sales states that the performance of individual locations will help determine where they stand when the AT&T deal closes. “Any business is going to look at their portfolio of assets and say, ‘Boy, what are the ones with the highest returns and the highest value?’” he says.
While third party retailers are often considered less popular as a place for purchase over a retail store it’s hard not to feel for their potential misfortune. A “rash” of store closings especially in outdoor strip malls which are frequently populated by cell phone stores would hit the economy hard. Outdoor strip malls are currently undergoing 10.9% vacancy rates that are expected to rise to a 21 year high this year alone.
But hey, this deal will create jobs, help the economy and give everyone a unicorn right AT&T?