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AT&T’s Thursday filing to the FCC related to the T-Mobile USA takeover was accidentally not redacted allowing for some details to come out that they likely would have preferred to stay private. AT&T unintentionally revealed that it would cost them $3.8 billion in additional capital expenditures to build out their LTE network from the 80% percentage they already planned on to the 97% they want to build. The document was accidentally posted on the FCC website by AT&T’s law firm and has since been pulled.
“AT&T senior management concluded that, unless AT&T could find a way to expand its LTE footprint on a significantly more cost-effective basis, an LTE deployment to 80 percent of the U.S. population was the most that could be justified,” AT&T counsel Richard Rosen stated in the letter.
The company said its merger with T-Mobile would spread the cost of the LTE expansion over a larger revenue base, allowing it to “better absorb the increased capital investment and lower returns associated with deploying LTE to over 97 percent of the U.S. population.”
So let’s get this right? Spending $3.8 billion to cover an additional 55 million people is too high of a price tag and isn’t sound economics but paying $39 billion PLUS the $3.8 billion it will still need to spend in order to build out that additional 17% is a viable economic model?
AT&T stands fast to its argument that the spectrum is their biggest gain from any T-Mobile deal, however Sprint has already shown AT&T how they can use their existing spectrum to achieve the same goals. Is AT&T really trying to avoid a resurgent Sprint from partnering/buying/merging with T-Mobile and creating a viable third place competitor that could pressure AT&T and Verizon into a price war? What is causing AT&T to all of a sudden be financially prudent about deploying an extra 17% of LTE but then spending 10 times that amount to pick up a rival?
AT&T said that the leaked letter doesn’t contradict their earlier arguments about needing to pick up T-Mobile’s spectrum for competitive reasons.
“There is no real news here,” said AT&T spokeswoman Margaret Boles in a statement provided to Wireless Week. “The confidential information in the latest letter is fully consistent with AT&T’s prior filings. It demonstrates the significance of our commitment to build out 4G LTE mobile broadband to 97% of the population following our merger with T-Mobile. Without this merger, AT&T could not make this expanded commitment. This merger will unleash billions of dollars in badly needed investment, creating many thousands of well-paying jobs that are vitally needed given our weakened economy.”
What say you? Is AT&T caught in a lie or are they sticking to their main argument that T-Mobile is a necessary purchase in order for AT&T to rollout LTE?
WirelessWeek via GigaOM
Additional reading: The Atlantic Wire