It’s been some time since AT&T announced its truthful intentions of buying out T-Mobile for $39 billion, a merger that will take place in about a year’s time. Most opinions on this buyout have been having a negative touch, regarding the deal as automatically increasing the prices, making carriers less interested in offering innovative products and services and price plans, all these attended by scepticism that regulators would allow this deal to actually take place.
Passing the regulation tests is backed up by AT&T announced intentions of expanding its LTE coverage, something the White House administration is very keen on, with support from AT&T’s unions (T-Mobile being non-union), acknowledges James Ratcliffe from Barclays. Speaking of socially responsible behavior, AT&T as well expressed its intentions of investing $8 billion to set up a new ultrafast broadband network in rural areas.
Now, a day in, analysts tend to see the positive side of this whole buyout story, Bernstein Research analyst Craig Moffet noting the synergy between the two mobile carriers in terms of ‘network, advertising and marketing, retail stores, support and SG&A, and spectrum.’
Regarding the financial term of the deal, AT&T would be expected to increase its ‘revenues by 36.4 percent, bringing wireless to 55 percent of consolidated revenues versus 47 percent currently. It would also raise AT&T to the number one place in terms of subscribers, revenue and EBITDA. Importantly, from a spectrum standpoint, the deal “relieves significant pressure off AT&T” says Simon Flannery at Morgan Stanley.
Many pundits said that Sprint was spoken for with a merger with T-Mobile in the last years, but no practical step had been taken in that direction. Now that AT&T’s intentions are widely known, the strategy of the mobile game is facing a dramatic change. The balance of interests now features Google that will benefit a major exposure with the AT&T & T-Mobile deal.