AT&T, T-Mobile Merger
On March 20, 2011, AT&T announced that it would purchase T-Mobile from Deutsche Telekom for a staggering $39 billion dollars. The now second largest wireless distributor AT&T would become the largest over its competitor Verizon wireless by acquiring the 30.8 million subscribers that T-Mobile currently holds. This would not be the first time a merger took place between Wireless providers, in 2004 Sprint and Nextel merged and in 2009 Alltel merged with Verizon. So it came as no surprise when the two carriers with compatible networks (GSM) announced a potential merger. AT&T has over 71 million subscribers with about 60 percent of these customers carrying a smart-phone. AT&T claims to have the “nations fastest network,” but with so many subscribers, the company network begins to build latency or “lag time.” This is why the merger was so critical for AT&T, so the company can continue to trademark their “Nations Fastest Network” slogan. Not only would AT&T acquire all of T-Mobile’s customers, but their entire network as well. This would provide a larger data network and better voice quality around the United States providing AT&T customers with a better experience. Unfortunately, on August 31, 2011 the Antitrust Division of the United States Department of Justice announced that it would seek to block the merger, and filed a lawsuit. Regulators questioned the effects the deal would bring not to consumers but the market in general. The acquisition would give AT&T 130 million subscribers and saturate the wireless industry to three main players. The market would essentially be an oligopoly. Regulators feared that the merger would cause higher prices, fewer choices and less innovation. AT&T chief executive Randal Stephenson stressed the fact that the deal would improve overall network quality and lead to large saving of the company, just a few of the benefits that the merger would behold. AT&T’s plan to buyout T-Mobile, were done in order to provide better services for all its present and future customers. The 39 billion dollar deal would not only perk up call quality, but it would also be able to increase broadband service and availability as well. If AT&T and T-Mobile were able to carry out their plans and merge their companies together, they would have potentially provided cell- phone services to at least ninety-five percent of the American population. The two companies together would be able to create a more advanced cell phone service that would enhance the overall coverage provided to consumers. This may sound like a difficult process; however, both providers are compatible, because they use the same GSM technology. This made their course of action a lot less difficult and would have made way for an effortless integration. With the new expansion, AT&T would have been able to invest billions of dollars for more increased and wide-ranged coverage. This included better service for rural areas and 30 percent more cell phone towers for the merged companies; on consumers’ side it meant less dropped calls. When there are more towers than before there is more service availability, which is a huge advantage for both companies. This is a win-win situation for both the consumers and the merged companies because it would first and foremost ease the present congestion of AT&T’s network, which in turn will make it a lot more desirable and more satisfying on the consumers end. This is the ultimate objective for any cell phone service provider who wants to maintain a successful company reputation. With a better company status, and more contented customers, AT&T would have become an unstoppable force in the cell phone arena; they also would have become the largest cellular carrier in the U.S. with around 130 million customers to service. The previous T- Mobile customers would still have been able to use their existing handsets, even if it is 2G or 3G, along with having a larger variety of phones to choose from. This would...
Please join StudyMode to read the full document