news

As AT&T Moves to Acquire T-Mobile, Sales Channels Are in ‘Wait-and-See’ Mode

When Sprint acquired Nextel Communications in 2005, the Overland Park, Kan.-based telecommunications provider converted its billing system to the Nextel platform.

The new platform was a better billing system, said Chris Ragland, principal with Order Experts LLC, an Austin, Texas-based mobility logistics provider that sells solutions on behalf of Sprint, AT&T and Verizon, among others.

Whether AT&Ts pending $39 billion acquisition of T-Mobile USA will produce similar beneficial results for the wireless carriers outside sales partners remains to be seen.

Ragland said AT&T and T-Mobile USA structure their pricing plans differently. AT&T, he said, will strive to honor T-Mobiles pricing plans and when they do that it becomes fairly complex.”

He also cited a challenge that AT&T could face to maintain customer satisfaction if the company eventually moves T-Mobile customers to AT&Ts billing platform and service agreements.

But Ragland thinks the real story is whether regulators will allow AT&T the second-largest U.S. wireless operator behind Verizon Wireless to purchase T-Mobile USA from Deutsche Telekom.

AT&T must obtain approval from the U.S. Department of Justice and Federal Communications Commission under a megamerger that would allow AT&T to overtake Verizon Wireless as the No. 1 U.S. mobile operator and further distance itself from its smaller rival, Sprint Nextel.

Regulators could move to block the merger or require divestitures of assets and operations. The Justice Department and FCC also may impose other conditions as it has done in other large telecom mergers.  

As AT&T and T-Mobile merge, about four in five cellular subscribers will be either AT&T/T-Mobile or Verizon Wireless customers,” In-Stat analyst Chris Kissel wrote in a report. The term Oligopoly comes to mind.”

The three companies serve roughly a combined 223 million customers, according to their fourth-quarter earnings statements. AT&T (95.5 million customers) and T-Mobile (33.7 million customers) served more than 129 million wireless customers at the end of 2010. Verizon Wireless listed 94.1 million customers at the end of the year.

Its no wonder that AT&Ts smaller rival, Sprint (49.9 million customers), has formally opposed AT&Ts acquisition of T-Mobile USA and vowed to fight to prevent the companies from merging.

Sprint has asserted the marriage of AT&T and T-Mobile USA would create a company that is nearly three times the size of itself based on wireless revenues.

Vonya McCann, Sprints senior vice president of government affairs, said in a statement that her company will fight this attempt by AT&T to undo the progress of the past 25 years and create a new Ma Bell duopoly.”

Over the last several years, U.S. regulators have approved several multibillion-dollar telecommunications mergers, including the pairings of AT&T and SBC Communications, Verizon and MCI and Qwest Communications and CenturyLink. Monroe, La.-based CenturyLink expected to close its $22 billion acquisition of Qwest on April 1.

It would be unusual, but not unprecedented, for the U.S. government to oppose a big merger based on antitrust concerns.

On Oct. 5, 1999, Sprint Corp. and MCI WorldCom announced a $129 billion merger agreement.  But the Justice Department sued to block the acquisition, and the companies subsequently terminated the planned union.

In a research note, Stifel Nicolaus analyst Rebecca Arbogast said AT&T will have accomplished significant strategic defensive objectives” even if regulators block the acquisition outright or require an unacceptable level of divestitures or other conditions.”

AT&T will have prevented T-Mobile from acquiring additional spectrum in support of a fourth-generation LTE build and prevented a T-Mobile/Sprint agreement, at least temporarily, wrote Arbogast, a Yale Law School-educated attorney who used to work at the Federal Communications Commission. Some analysts had speculated that Sprint and T-Mobile would combine operations. 

Ragland of Order Experts indicated the channels wont be able to assess the impact of the merger until the telecom providers have made decisions later on that affect their sales partners. But first, the feds have to approve the deal.

My experience has shown me you kind of have to [adopt a] wait and see attitude with the carriers,” Ragland said.

The announced merger, he added, illustrates that channel partners must be nimble. 

Its so important that you are agile because change like this occurs so often you have to be ready for it,” Ragland said.


Leave a comment

Your email address will not be published. Required fields are marked *

Polls

Is your business ready for the EU's GDPR to go into effect on May 25?

View Results

Loading ... Loading ...
The ID is: 83120