Behemoth battle ahead for wireless deal

  

It’s clear that AT&T’s proposed
acquisition of T-Mobile USA would reshape the U.S. wireless market by combining
the country’s No. 2 and No. 4 operators.

What’s not clear is whether the
deal, which is subject to regulatory approval, will actually go through.

Analysts are already expressing
doubts.

In a research note after the deal
was announced, Credit Suisse analyst Jonathan Chaplin called it “phenomenal…if
it happens.” The reason for his scepticism? The regulatory risk for such a deal
is “enormous,” wrote Chaplin.

That’s likely because a fused
AT&T/T-Mobile USA will create a behemoth that would serve around 130
million wireless subscribers.

By comparison, the current leading
U.S. wireless carrier, Verizon Wireless, has anywhere from 94 to 102 million
subscribers, depending on whether non-phone devices are included in the count.

Sprint Nextel, which will become
the smallest of the large U.S. carriers if the deal is completed, has 49.9
million subscribers.

The antitrust implications spur
Chaplin to write that he has “never seen a deal with more regulatory risk be
attempted in the U.S.”

He adds that since AT&T is
unlikely to “attempt a deal that they knew would fail,” the company may be
willing to make “massive divestitures and concessions” to win approval for the
transaction.

The deal needs the blessing
of the U.S. Department of Justice and the Federal Communications
Commission (FCC).

Consumer groups and other industry
watchdogs have been quick to denounce the deal.

Public Knowledge, a Washington D.C.
– based public interest group, called the transaction “unthinkable” and said it
would lead to “higher prices, fewer choices [and] less innovation.”

BUZAtmobiledealSTORY

A T-Mobile branded BlackBerry smart phone.
Photo: File
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