AT&T Chief: T-Mobile Merger Won’t Make Industry a Duopoly

AT&Ts top executive said his companys $39 billion acquisition of T-Mobile USA wont change one fact in the U.S. communications industry: that theres plenty of competition.

This industry is anything but a duopoly,” AT&T CEO Randall Stephenson told the Wall Street Journal, referring to his company and Verizon Wireless. The industry is intensely competitive now, and will be intensively competitive after the deal.”

But Stephenson expects AT&T will have to make some concessions through some divestiture of customers and wireless spectrum, the Journal reported.

We anticipate there will be some markets we will have to divest,” he told Wall Street’s paper of record.  

Its common for U.S. regulators to impose conditions under multibillion-dollar merger agreements. 

Craig Dingwall, a telecom attorney with Technology Law Group in Washington, D.C., expects the merger to “face stiff scrutiny from federal and state regulators, particularly given the higher market concentration that it would place in the two top wireless carriers in the U.S.”

If history is any indication, this merger will likely be approved with significant conditions involving spectrum, Net neutrality and wireless broadband expansion commitments,” Dingwall said.

It is possible the federal government could block the merger or seek conditions so substantial that AT&T walks away,” analysts with Stifel Nicolaus stated in a report this week.

The last time the feds opposed a huge telecom merger was more than a decade ago when the U.S. Department of Justice sued to block the $129 billion marriage of WorldCom and Sprint. 

The U.S. telecommunications landscape has changed radically since then.

Citing evidence of abundant competition, Dallas-based AT&T has said there are five or more wireless providers in 18 of the top 20 U.S. local markets. 

But a union of AT&T and Bellevue, Wash.-based T-Mobile USA would shrink the pool of the big national mobile operators AT&T, Verizon Wireless, Sprint and T-Mobile from four to three.

The merger also would make AT&T the largest wireless provider in the United States, surpassing Verizon Wireless, and extending its lead over the No. 3 wireless provider, Sprint Nextel, which formally opposed the merger earlier this week and asserted the combined company would generate wireless revenues nearly triple those of Sprint.    

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 recent report.  The term Oligopoly comes to mind.”

AT&T, T-Mobile USA and Verizon Wireless serve roughly a combined 223 million customers, according to their fourth-quarter earnings statements. AT&T (95.5 million) and T-Mobile (33.7 million) 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.

Leave a comment

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


As a budget line item, how are staff salaries trending in your company for 2019?

View Results

Loading ... Loading ...
The ID is: 83225