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
Cited: "5 Pros and Cons for AT&T 's T-Mobile Buyout." PCWorld. Web. 04 Mar. 2012. . "AT&T To Buy T-Mobile for 39 Billion Dollars, Pros and Cons." Tech Gadgets News. Web. 04 Mar. 2012. . Daw, David, and Mark Sullivan. "AT&T, T-Mobile Merger Collapse a Victory for Consumers." PCWorld. 19 Dec. 2011. Web. 04 Mar. 2012. . Ulanoff, Lance. "5 Reasons the AT&T, T-Mobile Merger Is as Good as Dead." Mashable. 28 Nov. 2011. Web. 04 Mar. 2012. .