AT&T promised T-Mobile $6 billion if acquisition doesn’t get approved

AT&T would give T-Mobile $6 billion in cash, assets and services if its proposed acquisition doesn’t go through. Yesterday we reported on a U.S. Senate hearing and it seemed like legislators were still unconvinced of the upsides of the deal. AT&T was even asked why it couldn’t just spend the $39 billion it planned to spend on the acquisition on improving its own network, which had been drawing serious criticism for performance since the iPhone 3G was released.

Reuters reports:

The $6 billion would include $3 billion of cash, as AT&T has previously disclosed, and about $2 billion worth of spectrum and a roaming agreement valued at $1 billion, according two sources who asked not to be named as those details were not public.

Whether this deal goes through or not, it’s going to be a large chunk of change for AT&T. And for the most part, support for the acquisition has been mostly absent. The opposition has been very vocal and consistent – Sprint’s CEO, for example, has made it very clear that the move would be bad for the industry. He also said that it would increase the chances of Verizon acquiring Sprint, which would create a duopoly in the wireless industry in the U.S. That can never be good news for consumers.

Sprint has capitalized on the situation by offering T-Mobile customers an opportunity to switch to its network almost hassle-free. I suspect that maybe other carriers, whether it’s Verizon or smaller local carriers, might try to take advantage of the air of uncertainty that this has caused for T-Mobile customers.

[Via: Reuters]

  •  I am currently a Sprint AND T-Mobile customer. Both networks have great points and down points, but both are definitely put at risk by the merger. AT&T is notorious (as previously shown with AT&T Wireless and Cingular) for lacking backhaul, spectrum and other investments for the amount of customers they have. There is no point in showing coverage maps and “more bars” where you cant even get the call or data connection to go through because the physical infrastructure is lacking or non-existent. T-Mobile on the other hand has a habit of using their spectrum to the best management, and investing in backhaul, but lacking infrastructure for coverage. Merging both of these together is the ONLY upside, provided the new network is EXACTLY a 50/50% joint venture and both companies continue to work on exactly what they are good at and ONLY that aspect.

    On the downside, it does take out the only other national GSM carrier (this includes all its MVNO’s and affiliates) and makes GSM a monopoly in the USA, it also means that world customers that come to the USA to roam are now obligated to have service via AT&T and no other provider. 
    It will stiffle innovation not only by carriers but manufactures. It will raise rates and the prices of phones faster than inflation – due to manufactures limiting production to any carrier that doesnt have money to pay for more inventive phones. While it will in the short run cause other companies like MetroPCS, US Cellular and even Sprint to be more inventive with rate plans and services, the cost of these innovations alone to differentiate it from AT&T and to gain even a few subscribers could potentially cause a company to lose more money than it will gain. This then makes companies like US Cellular, MetroPCS and Sprint to look very attractive at a reduced cost to Verizon.
    The merging of networks into one rarely ever works perfectly, however the “sharing” of networks via loose roaming agreements or partnerships are whats best for consumers at this point. It will also create innovation by pooling funds, spectrum, and increase competition by offering phones across all networks to work on each carrier respectively sharing networks. Think Cingular/AT&T Wireless pre-merger, or T-Mobile/Cingular GSM Partners or T-Mobile/Orange Everything Everywhere with “3 Hutchison” in the UK. These kinds of mergers of networks but separate entities is what causes innovation, rate plan competition and answers the questions of problems with coverage, spectrum and 4G technology deployment.

    Thats my take on it.

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