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AT&T Buying T-Mobile US – Thoughts

Thoughts on AT&T’s proposal to buy T-Mobile – Karl Denninger and Robert Scoble, & Brett Arends

One bad company buying another: AT&T buys TMobile (Verizon forced this marriage!)

AT&T Wifi Box in Starbucks store in San Mateo

You all know I really despise AT&T, even though I continue paying them thousands of dollars per year for three cell phones. Since getting my Verizon iPhone I haven’t dropped a call and I can actually hear the other party. Steve Gillmor got one on Friday and, wow, what a difference. Not to mention that the world’s toughest dead zone: Devil’s Slide is non-existent for AT&T and TMobile, but works the entire way on Verizon for me.

TMobile is even worse. It doesn’t have enough coverage. My entire neighborhood, which includes some of the houses of the richest VCs, not to mention VPs from Apple, HP, and other places, has NO TMobile Coverage. This isn’t back waters of some flyover state. It’s 13 miles from the tech center of the world (at least until Beijing takes over later this decade).

CNBC just announced AT&T is buying TMobile’s US business for $39 billion. More details flowing in on Google News and even more over on Techmeme. That’s one way to get more bandwidth to try to serve iPhone users better before they all realize Verizon has a better network.

I think this COULD be a good thing, if they fill in some of the numerous dead zones and get us better service. I’m stuck with AT&T because I need to head to Europe every few months and AT&T’s iPhone is better there. Also because in other places AT&T does have better coverage, and its data is faster and also I can use data while talking, which really isn’t that big a deal for ME anymore (since I have two phones, I solved that problem).

Anyway, does one bad company buying another make a good one? I guess we’ll see.

Yes, I know I might get crap for calling these companies bad companies, but I’ve paid AT&T thousands of dollars over the last few years. I’ve earned that right.

Speaking of which, why didn’t they just spend that $39 billion making a better network? Oh, do I love capitalism sometimes.

This is a forced marriage due to Verizon finally getting the iPhone. If that hadn’t happened AT&T would have continued not to worry and continued not to invest in its network. Now that they know lots of people will switch when their contracts are up they needed to do something huge to try to improve the network before everyone wises up. 



AT&T Buys T-Mobile US: Idiotic 

Courtesy of Karl Denninger, The Market Ticker 

I’ll have a more-complete analysis of this deal tomorrow, but my first-blush look says that:

  • DT got the better end of this deal.  By far.  A quick back-of-the-envelope on the deal says AT&T paid double the typical EBIDTA valuation for a wireless business.  To say that AT&T overpaid would be the understatement of the year.
  • AT&T will be looked at as getting a "compatible" customer base.  Well, no.  Only for voice.  The 3g networks are incompatible anyway, since there’s a frequency band difference.  One exception: It appears the Samsung Galaxy series units can actually work on both 3g bands but you have to turn it on via a hidden menu.  All other devices however are incompatible and thus the entire "re-equip someone" problem will remain.
  • If AT&T dishonors the grandfathered customer deals (especially those off-contract) from T-Mobile or tries to squeeze them (T-Mobile’s plans are materially less expensive than AT&Ts) the rate of defections will astound.  There are other choices, including prepaid ones, even for smart phones.  If, on the other hand, AT&T moves to T-Mobile’s rate plans and honors T-Mobile’s grandfathered plans then there will be a material per-user revenue hit to AT&T.  If AT&T can turn a profit at the lower prices, all is good.  If not……

Over-all I don’t see the "synergy", but as a T-Mobile customer I may – and I repeat may – benefit from this.  There are significant regulatory hurdles as well in that the deal looks anti-competitive at first blush in a lot of markets.  One way AT&T and T-Mobile could really put the hurt on the regulators would be toimmediately open up cross-system roaming for both carrier’s devices in both directions – this would give the T-Mobile customer the "better" data experience of AT&T outside of major cities and would create a huge base of very ****ed off consumers if the FCC were to disapprove the merger.

I’m more-or-less "gone fishing" today but will post a more-complete analysis on Tuesday; the early-market reaction has Sprint dumping (my April’s are probably worthless, but I had a March position cashed late last week that covered both, so it’s an on-balance wash) and AT&T moving materially higher.  Buying the stock of a company that radically overpaid on an acquisition and can only retain the customers acquired by cutting margins for their existing customer base? Sounds like a great way to get hammered.

No thanks. 



Why AT&T’s deal for T-Mobile must be blocked

Commentary: Cell-phone service deal would kill competition


By Brett Arends, MarketWatch

BOSTON (MarketWatch) — AT&T’s move to take over T-Mobile USA is great news for stockholders. It will let AT&T shut down a competitor, jack up prices, and save on customer service.

The news is also absolutely disastrous for everyone else.

For exactly the same reasons.


Write to your Congressman. Write to your Senator. Write to the Federal Communications Commission and the U.S. Department of Justice, both of of which must approve the deal.

Tell them this takeover must not be allowed. No, not with conditions. Not with asset disposals. Not with commitments.

It must never be allowed. Ever. No way, no how.

The absolute bedrock of capitalism is competition.

The whole essence of our free market system lies in consumer choice.

Continue here > 


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