news


AT&T stands to make the most from T-Mobile deal

AT&T and T-Mobile have dropped their proposed $39bn merger

The pending deal between AT&T and T-Mobile USA is symptomatic of growing market maturity in the US but will be better for the American telco than it will for Deutsche Telekom, according to Ovum analyst Steven Hartley.

“AT&T gains spectrum for the forthcoming 4G battle and synergies, but Deutsche Telekom gets a cash boost way below the price it paid to enter the US market, and it loses its global presence,” Hartley said.

But it is fellow US player Sprint that stands to lose the most from the deal, Ovum said. Sprint had 16 per cent of the connection market in Q4 2010, making it the third largest player in the US mobile market. While the new deal will see it holding its market position, it will only have half the connection share of Verizon Wireless, according to Hartley. “Just as it was beginning to recover from its disastrous previous few years, so it is being further cut adrift from the leaders,” he said.

The key benefit for AT&T is T-Mobile’s spectrum, which will enable it to boost its own LTE plans while also leveraging T-Mobile’s recent aggressive HSPA+ rollout. “The technology fit makes this so much more appealing than an oft-rumoured, but illogical T-Mobile/Sprint tie up,” said Hartley.

Shares in Deutsche Telekom jumped by as much as 16 per cent yesterday on the back of Sunday’s surprise announcement of the T-Mobile/AT&T deal, which is valued at $39bn. The purchase will see AT&T gaining 34 million customers and a 43 per cent market share. Informa analysts suggested yesterday that gaining approval for the deal is likely to be difficult, with Mike Roberts pointing to the significant increase in market concentration as likely to draw fire from the US authorities.

In addition to the likely regulatory difficulties, integration on the technology front could also prove a challenge. “While certainly simpler than a Sprint/T-Mobile integration would have been, AT&T still have technical hurdles to overcome,” says Hartley, “not least the fact that they operate in different GSM spectrum bands, so even after the two companies join together, it will be some time before devices from the two operators work on each others’ networks.” Even after that, devices will likely have to be provisioned with more spectrum bands than previously if they are to take advantage of the combined network. “But AT&T certainly has the recent integration experience to make it work,” said Hartley, pointing to its past merger successes with BellSouth, SBC and Cingular.

The seventh annual LTE World Summit takes place in Amsterdam on 17th – 18th May


Leave a comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Events

There are no upcoming events.

Polls

What is your name?

Loading ... Loading ...