AT&T to Buy T-Mobile: Only Shareholders Will Win

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AT&T announced a deal this weekend that would buy T-Mobile USA from its owner, Deutsche Telekom, for a cash and stock trade worth $39 billion.  This would be one of the largest telecom consolidations in history and will likely see a lot of scrutiny from the U.S. government before it would be allowed to go through.

The merger would make AT&T the largest U.S. wireless carrier by a very wide margin and given the Federal Communication Commission’s evil eye towards wireless carriers already, the companies were smart enough to say that the deal could take up to a year to foment.

The combination would mean AT&T would have a total of about 129 million subscribers while Verizon has only 94 million, just under AT&T’s current total (as of December 2010).

T-Mobile has already let customers know, through a new FAQ on their website, that access to the iPhone would not come until after the deal completes.

Given that, the question of who wins in this situation is pretty important.  It won’t be anyone but the shareholders in AT&T and T-Mobile.  Here’s why.

Consumers will lose a major competitor in the wireless market and one who, generally, offers lower and more competitive prices in order to compete with the larger AT&T and Verizon.  With T-Mobile gone, only Sprint remains as a small carrier and it’s getting smaller (and less relevant) by the minute.

Handset makers will see the GSM-based market completely consolidated into one monopoly and potentially see LTE dominated by only two players (Verizon and AT&T with 4G).  This means they’ll be looking at only being able to sell their technology to companies that can, essentially, dictate terms.

Sprint will continue to lose market share because, without T-Mobile to team up with against the big boys, they essentially have no more lobby worth mentioning in Washington.  This means the others will be able to regulate them out of business.

Gigaom points out that Google (specifically Android) may also become a big loser here.  With only two major companies vying for the Android phone (and also carrying Apple’s iPhone), the handsets and OS could become the de facto property of the carriers, shutting Google out.

All in all, this is not good news for anyone, really.


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