Monday, December 19, 2011

AT&T drops bid for T-Mobile

It's over: AT&T has formally abandoned its effort to buy T-Mobile USA. AT&T already had booked a $4 billion charge, representing the breakup fee to be paid to T-Mobile USA for a failed acquisition attempt. AT&T drops bid for T-Mobile

Deutsche Telekom, the parent of T-Mobile USA, now will be looking at other options to make liquid some of its U.S. operations, for the simple reason that it needs the cash to build out Long Term Evolution networks elsewhere.

We also should expect a new round of activity by firms looking to partner or invest in T-Mobile USA as well. Presumably those new suitors are investors who have complementary assets, such as spectrum assets that could help T-Mobile USA create an LTE network, while giving the new investors access to the skills a mobile service provider possesses.

T-Mobile USA's problems include lack of spectrum for a fourth-generation network, customer churn, lack of access to the Apple iPhone, and competition both from the "premium" providers AT&T and Verizon Wireless at the "top" of the market and lower-cost prepaid providers from below.

Sprint has somewhat similar problems, being much smaller than either AT&T Wireless or Verizon Wireless and less well positioned financially.

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