5 Shockwaves Caused by AT&T – T Mobile Deal

Higher prices, headwinds for Sprint, less choice are top consequences

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5 Shockwaves Caused by AT&T – T Mobile Deal

AT&T Inc. (NYSE: T) has announced plans to buy T-Mobile USA from parent Deutsche Telekom (PINK: DTEGY) in a $39 billion deal, creating the largest cellphone company in the U.S. With nearly 130 million subscribers, the move (if approved by regulators) would put AT&T handily above rival Verizon (NYSE: VZ) and its 102 million customers.

For T-Mobile customers who thought they would never see an Apple Inc. (NASDAQ: AAPL) iPhone on their network, your day has come.

The red tape will take a full year to unwind according to estimates, but when it’s over the buyout means big things for all cellphone customers – not just T-Mobile fans who will get a shot at a wider array of smartphones through AT&T. Here are 5 ways the buyout changes the game in the mobile marketplace, not just for telecom stock investors but also for consumers:

Less Choice

The obvious loss is T-Mobile as a choice for cell phone customers. That brings the market down to a mere three providers in the U.S. But also important is the loss of T-Mobile “flavors,” including an unlimited data plan for your smartphone at just $30 a month. Verizon and AT&T have already announced plans to kill their unlimited plans, and the purchase of T-Mobile has effectively killed it one more place, too. Other pricing plans are sure to disappear – both from AT&T’s lineup as well as from T-Mobile’s current offerings.

Big Trouble for Sprint

Sprint (NYSE: S) had been in distant third place behind AT&T and Verizon with “only” 50 million customers. This puts the company even farther behind. What’s more, the buyout of T-Mobile by AT&T prevents a strategic move by Sprint to acquire the firm first. Not like it has the capital to do that even if it wanted to – Sprint hasn’t turned a quarterly profit since the summer of 2007, and is scraping together cash to upgrade its network to compete better. But doubling its customer pool to become #2 in the mobile market is a practical impossibility, and the loss of T-Mobile as an acquisition target means Sprint will now have to fight tooth and nail for every tiny piece of market share.


Article printed from InvestorPlace Media, http://investorplace.com/2011/03/att-merger-t-mobile-buyout-verizon-sprint/.

©2014 InvestorPlace Media, LLC

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