AT&T and T-Mobile Merger Off; See What it Means for You

December 20, 2011, By Sanjeev Ramachandran

So AT&T has abandoned their merger plans with T-Mobile, after a whole lot of  opposition from different quarters.

If you are one of those who are left with many questions and no answers regarding the future of the carriers and its implications on the customers, you are at the right place. We think we have the answers for most of your questions, if not all.

This is what will happen. AT&T would not continue to pursue the $39 billion merger of T-Mobile USA.

As part of the break-up with Deutsche Telekom, T-Mobile’s parent company, AT&T will have to pay a fee of $3 billion in cash to Deutsche Telekom as well as provide $1 billion in wireless assets.

Deutsche Telekom said they have no interest in sinking more money into the US wireless market. So it’s unclear what Deutsche Telekom will do next. They could look for another buyer, may be. Or T-Mobile could enter into a partnership with AT&T, only a merger is out of the question.

For the T-Mobile customers, the status quo will not change for months; even if the carrier finds some other buyer. AT&T and T-Mobile subscribers are not likely to see any changes in the rates or service anytime soon. T-Mobile may try to get more aggressive on pricing though, it is absolutely necessary considering the present state of affairs.

The US Department of Justice and the Federal Communications Commission, who opposed the deal, have said that AT&T’s decision to abandon the purchase need to be seen as a victory for consumers.

And, retaining competition is one good thing as far as customers are concerned. If the merger happened, it would have meant concentration of power.

Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation.

Another aspect is that T-Mobile is not as strong compared with the other major carriers in the US. They do not have enough spectrum to make a transition on their own to 4G LTE technology.

And, they have been steadily losing customers too. So it may not really count as the fourth major competitor, after AT&T, Verizon and Sprint. But if T-Mobile manages to find another buyer, that player may turn out to be the fourth competitor. Till then AT&T and Verizon would remain the top choices for customers.

But it does not look like the existing competition is not the biggest advantage for customers in the wireless space, with only two major players standing out. AT&T, by the way, needs more capacity and spectrum for the 4G LTE roll out.

What do you have to say about the broken merger?

© 2008-2012 - All rights reserved | Privacy Policy