AT&T and T-Mobile withdraw merger application with FCC

Discussion in 'Apple, Inc and Tech Industry' started by Naimfan, Nov 24, 2011.

  1. Naimfan macrumors 68040

    Naimfan

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    #1
    AT&T and T-Mobile have withdrawn their merger application with the FCC, according to a joint release made by the companies. AT&T also said it will take a $4 billion charge against earnings to account for the breakup fee in the agreement, of which $3 billion is in cash and $1 billion is in spectrum. The announcement makes the deal considerably less likely to close, to the relief of many consumer advocates.

    The complete story can be read at the New York Times.

    It is unclear what the withdrawal of the merger application means for T-Mobile's access to selling the iPhone. On the one hand, with Sprint now having the iPhone, Apple appears to want to get the iPhone in the hands of as many customers as possible, which could make it more likely that T-Mobile will get access to the iPhone. On the other, Apple could well decide that T-Mobile is unlikely to survive and not want to dilute the iPhone and Apple brand, and not allow T-Mobile to sell it.

    From a larger perspective, the withdrawal of the merger application seems to signal that the companies recognize there is too much opposition to the merger for it to close. The FCC and Department of Justice have stated their opposition to the merger, and the DoJ has filed an anti-trust lawsuit to stop the merger. Similarly, the FCC stated that the merger does not meet the requirements for approval.
     
  2. macinnv macrumors regular

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    #2
    Im surprised this proposed merger hasn't created much conversation forum in this or the Politics forum. The deal isn't looking good and with how bad of a shape T-Mobile is in, its hard to say what will become of them should this merger fail.
     
  3. athens, Nov 24, 2011
    Last edited: Nov 24, 2011

    athens macrumors member

    athens

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    #3
    This is a good thing for the US market. 5 Years ago in Canada we had 4 major players in the market, Fido, Telus, Rogers and Bell. And a few years before that we also had independent smaller players like Mike as one example. Telus bought Mike and when Rogers bought Fido, both of which introduced cheaper rates the cell phone market changed in Canada drastically with prices and fee's with only 3 major carriers. Rogers kept Fido as a value brand and then Telus created a value brand along with Bell to compete in the value market but we still got screwed with high prices and fees for the services we got.

    Its one of the reasons the federal government made sure the wireless spectrum auction we had similar to yours from the change to digital over the air TV was not accessible to the major players. They wanted new companies in the market to compete and bring the prices down.

    The market is a lot better today. But had AT&T and T-Mobile merged that would have left you with Verizon, AT&T and Sprint and a bunch of smaller carriers. I would have expected to see US plans becoming more like ours which would not have been a good thing.

    Additionally T-Mobile access to the iPhone has nothing to do with market. T-Mobile is on AWS-1 which the iPhone does not support. Its why our AWS carriers like Wind Mobile can't use the iPhone either. When the iPhone supports AWS you can bet T-Mobile and all the other carriers on AWS will support it too.

    The list of phone support for AWS-1 is pretty tiny compared to GSM and CDMA

    http://en.wikipedia.org/wiki/List_of_AWS_devices

    Because AWS-1 is only used in Canada and the United States and with only 4 small carriers and T-Mobile the only major carrier I can't see the iPhone supporting it any time soon.
     
  4. jav6454 macrumors P6

    jav6454

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    This is a bad thing... this merger needed to happen. D-Telecom doesn't care for T-Mobile anymore.
     
  5. Rodimus Prime macrumors G4

    Rodimus Prime

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    Then they should just spin it off into their own company. Let. It run independent or sell it to a good group to run it.
    The merger was bad. For everyone but Verizon and AT&T. Prices would of gone up and sprint would be two small to be competitive to the two super companies.
    Prices. Have been going up since we went from what 7 companion a few years ago to what 4.
     
  6. wordoflife macrumors 604

    wordoflife

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    #6
    First step into the right direction. I disapprove of the merger.
     
  7. jav6454 macrumors P6

    jav6454

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    Sprint can compete. They are doing so right now with the ads smacking AT&T and Verizon of their stupid data caps. Sprint can compete, they just want it easy.

    Prices will not increase. If anything its cheaper than ever for me to pay for cell service ($20 text plan gives me free all US mobile-mobile)... yes text is a highway robbery, but all carriers do this. Also, what can match Sprint's $69 and $99 plans? Nothing. If anything, Sprint should shut up, use its lawyer money on building their slow arse network.

    Also, regional carriers are booming. Look here in New Orleans. Cricket is coming. Now we have 8 cell companies to choose from. AT&T, Verizon, T-Mobile, Sprint, Boost (although Sprint owned), Trac-fone, Wal-mart branded service and now Cricket. So competition will go no where; not to mention other carriers in other regions of the country that are expanding.
     
  8. Rodimus Prime macrumors G4

    Rodimus Prime

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    Regional are not national and they have some major limitation that pretty much kills them as an option for a lot of people. Their coverage is very limited and people generally live it multiple times threw out the year.

    Sprint is able to play right now but AT&T and Verizon do not control a vast majority of the market. T-Mobile and Sprint combined control enough market share to effect the other 2 but on their own they are screwed.

    And yes price will go up. Look back and lets see what we have now. Teired data, text message prices have gone up. not down. AT&T has removed everything but unlimited txt messages.

    We are getting screwed. This merger would not bring prices down. They would go up. It would greatly reduce the competition.
     
  9. MacNut macrumors Core

    MacNut

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    #9
    So where was the DOJ when all these banks merged or when Comcast bought NBC?
     
  10. Naimfan thread starter macrumors 68040

    Naimfan

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    Agreed. That's why I'm glad to see the merger on the verge of dissolution - AT&T would not be taking a $4 billion charge against earnings if it thought there was any chance of the merger closing.

    Do note the timing of the regulatory rollbacks that allowed banks to merge - that happened on the Shrub's watch, and at his urging.
     
  11. MacNut macrumors Core

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    Ok so what about Comcast and NBC? Cable companies should not be allowed to own major broadcast networks.
     
  12. Naimfan thread starter macrumors 68040

    Naimfan

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    According to you?
     
  13. MacNut macrumors Core

    MacNut

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    According to most people. Why should the biggest cable company in the world be in control of the NBC Universal properties, thats what, 15 tv networks, a full movie studio. All of witch Comcast can control the carriage rights and demand all other cable companies money? If it was bad for AT&T to own T-Mobile why is it good that Comcast gets control of a huge media company?
     
  14. Naimfan thread starter macrumors 68040

    Naimfan

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    #14
    Would you care to provide a source for this claim?

    Note that I haven't said if I think it a good idea or not.
     
  15. MacNut macrumors Core

    MacNut

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    #15
  16. Naimfan thread starter macrumors 68040

    Naimfan

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  17. Peace macrumors Core

    Peace

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    Im confused. If the DOJ said the merger would create too big of a company and stifle competition how is it T-Mobile could go under now ?

    Either T-Mobile is big enough to make that huge a difference or they arn't .

    Can't be both.
     
  18. Rodimus Prime macrumors G4

    Rodimus Prime

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    #18
    Even if t-mobile goes under AT&T and Verizon would more than likely be banned from buying up their assets. Assets being customers, spectrum, and towers.
    Sprint might allowed to buy up some of the stuff.
    It would leave use with a bigger sprint or still a 4th company.
     
  19. Peace macrumors Core

    Peace

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    T-Mobile USA won't go under. At least I don't think they would.

    Revenue US$21.347 billion (2010)
    Operating income US$2.705 billion (2010)
    Net income US$1.354 billion (2010)
    Total assets US$46.291 billion (2010)
    Total equity US$20.492 billion (2010)
    Employees 42,000 (2010)
     
  20. Rodimus Prime macrumors G4

    Rodimus Prime

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    I do not think they will go under either. I do think they need to be spun off from their. German owners who have zero interest of doing updates for the network.
     
  21. macinnv macrumors regular

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    #21
    While this is correct in that they are profitable, they have been bleeding contract customers for the past few years and the new pre-paid customers they are adding arent as profitable or dependable.
     
  22. jav6454 macrumors P6

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    However, remember that T-Mobile is loosing A-Tier customers to AT&T and Verizon. All that is being left is the prepay segment that although big, isn't a dependable income source.
     
  23. gkarris macrumors 604

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    Only because of the lack of the iPhone - T-Mobile USA needs the iPhone now more than ever or it'll just go away...
     
  24. jav6454 macrumors P6

    jav6454

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    Funny how one phone can determine the life of a carrier now-a-days?
     
  25. benzslrpee macrumors 6502

    benzslrpee

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    #25
    they are profitable but they aren't generating much free cash.

    their working capital management is not good. the cash equivalent portion of the current assets to liabilities is roughly -$1.5B. their CAPEX on LTE technology has been primarily financed by debt.

    now, in theory they could up their leverage till they look like Sprint and Clearwire. that'll really screw with their cost of capital and pretty much up the required rate of return on everything they do. plus, it'll increase their enterprise value making it a much more expensive company to acquire in whole or broken into parts.

    i know most people here are opposed the merger but i think the DOJ should really take a long hard look at AT&T's 40% divestiture proposal. no matter how you cut it, selling/splitting T-Mobile is not going to be a net economic gain in the short run.

    their parent company DT doesn't want it back. if AT&T can't buy it then i assume Verizon won't be allowed to either. that leaves Sprint who just spent $20B on Apple i seriously doubt they could afford take on a company around $20B - $40B in size... depending on which investment bank you ask. regional carriers are even more cash strapped so they are ruled out.

    if T-Mobile gets split up, the most valuable asset on the chopping block is spectrum. it's more than likely that AT&T + Verizon will bid the spectrum price sky high so it's unlikely smaller carriers will get that. the left over telecom assets would be sold in parts and in the current economy, all the players interested in buying parts of T-Mobile will probably lay off non-essential employees post-acquisition to keep costs down.

    i think the results will be the same in the end. T-Mobile will still be sold (whether in whole or in parts), jobs will still be lost and the US wireless market will go from the big 4 to the big 3.



     

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