March 20 2011|01.47 PM UTC

Erik Chang

AT&T Agrees to Buy T-Mobile for $39 Billion – Do Customers Win or Lose?

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Here’s a wowzer deal that came rather unexpectedly (although in hindsight it makes perfect sense for AT&T). AT&T (NYSE:T) has singed an agreement with T-Mobile’s parent company, Deutsche Telekom AG to buy T-Mobile USA for a deal that’s worth $39 billion in a cash-and-stock arrangement.

Having the second-largest U.S. carrier combining with the fourth-largest will make the merged company the largest carrier in the U.S., with a combined customer base of over a staggering 130 million people. This makes the combined carrier about 1/3rd larger than competitor Verizon Wireless (NYSE:VZ) and almost twice as large as Sprint Nextel (NYSE:S).

While both networks, pricing plans, and offering have many similarities for the large U.S. carriers, the parallelism was born more due to competition than any “straightforward synergies” that AT&T likes to claim in their press release for the deal agreement.

In my personal opinion, this may become a rough situation for many customers across the board as pricing and choices will become severely limited. While the deal will have to go through the usual regulatory scrutiny, it is discouraging to think about our wireless choices from basically only three major carriers.

With the current trend in data cost and mobile devices becoming the next major market/revolution after the personal computer, imagine having little option as carriers raise prices across the spectrum on access to data. Make no mistake, this deal, if approved by regulators, will change the face of the U.S. wireless industry.

How do you feel about AT&T buying T-Mobile? Share your thoughts and comments below.

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{ 2 comments… read them below or add one }

Sriram Ramamurthy March 21, 2011 at 12:55 am

Yep!! All that 1/3rds larger and 1/2s as small boil down to the equation that AT&T and Verizon together would own 3-out-of-every-4 wireless subscriptions in US. With my smattering of business knowledge, this is the biggest merger in recent years with potential to cause deepest impact. Plus, I can’t wait to see how the many new infographics that this blog will come up with and how the BillShrink Wireless results set will change as an aftermath of this deal.


unhappyCakeEater March 21, 2011 at 11:49 am

I expect the whole thing to be net bad. More money for less service, and most importantly, what will happen to Carly Foulkes?


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