ATT to buy T-Mobile for $39 billion USD

Word came down late yesterday that ATT has completed negotiations with T-Mobile to purchase the latter for $39 billion dollars US. What does that mean for everyone concerned?

 

The big winner in the ATT buyout of T-Mobile is T-Mobile. Generally, it is anticipated that ATT will pay a huge premium for the Deutsche Telekom stock. Overseas, T-M does pretty well, given the huge amount of competition in Europe. Domestically, they’ve not done as well, even with their lower monthly pricing, due to their network not being built out as much as ATT, Verizon or Sprint.

ATT is mostly buying T-Mobile for their spectrum, and to a lesser extent, the customer base. This buyout will vault ATT back into the #1 spot in the US with approximately 130 million customers, far surpassing Verizon’s 94-95 million at #2. ATT will use the T-Mobile spectrum to alleviate network pressure in bigger cities like San Francisco and New York City, and make a true 4G network a reality nationwide.

 

The big loser in this ATT deal, assuming it passes regulatory scrutiny (a good bet that this was already thought of, since ATT has to pay T-Mobile a $3 billion USD ‘breakup fee’ if the deal fails to close), is the consumer. The loss of competition in the marketplace stifles innovation and won’t drive prices lower. However, given President Obama’s desire to push wireless broadband to 98% of Americans, this T-Mobile to ATT deal may well be a boon, providing a service where there was none before.

Generally speaking, this merger will almost certainly go through. ATT and T-Mobile probably did their due diligence work to make sure the regulatory questions would and could be settled as quickly as possible. ATT might be a ponderously large company, but it hasn’t survived more than 100 years by being stupid.