AT&T Accidentally Reveals That It Doesn't Need T-Mobile At All

from the oops dept

One of the key talking points from AT&T in support of the T-Mobile merger is that it “needs” T-Mobile’s spectrum in order to expand its planned 4G/LTE networks to cover 97% of the population. And, there’s no doubt that having T-Mobile’s spectrum will make it easier, but that’s not the same as it being necessary. As Broadband Reports has been pointing out for a while, Verizon has less spectrum than AT&T but can cover the same 97% of the population with it. Apparently a lawyer for AT&T accidentally posted a document to the FCC’s site that more or less admits that AT&T doesn’t need T-Mobile’s spectrum, and that it could invest $3.8 billion to catch up to Verizon in terms of LTE coverage. $3.8 billion is a fair bit of money, but it’s a hell of a lot less than the $38 billion that it’s spending for T-Mobile. Yes, AT&T also gets T-Mobile subscribers with that, but it certainly raises questions about AT&T’s claims that it would be too “costly” to invest to get to 97% coverage with its existing spectrum. As BBR notes, the timing of the letter also suggests that AT&T knew it was planning to buy T-Mobile when it decided to claim that it would “not” build out its network, perhaps recognizing that this would help give it a talking point for why the merger should be allowed.

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Companies: at&t, t-mobile

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Comments on “AT&T Accidentally Reveals That It Doesn't Need T-Mobile At All”

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22 Comments
Anonymous Coward says:

Well, the “truth” isn’t always exactly the truth.

What AT&T is paying for is the customer base, the existing networking (including some 4G stuff), which is generating about 20 billion a year of revenue. Net bottom line more than pays for the money to borrow this stuff.

They get a customer base, they get ready income, and they get more coverage up front – and best of all, enough income to pay for the take over.

They can still spend the 3.8 billion over time to improve their existing network, but now they are doing it for a much larger customer base (cost per user drops significantly).

Mike, where is your MBA from again?

Anonymous Coward says:

Re: Re:

Whats your point? Nobody wants AT&T to merge and reduce competeition, but AT&T pretends like they have to do it or else theyre crippled and nothing will ever get better. If that were true it might mitigate our distaste for the competition reduction. If it isn’t true, then we all laugh and say suck it up, you can take it.

None of this has _anything_ to do with whats good business, and it has everything to do with what we’re going to let the market do and why.

Jim O (profile) says:

Re: Re:

AT&T is paying to remove a tertiary player (Tmobile) from the wireless market. Further, they are paying to block Sprint from acquiring T-mobile (thereby effectively knocking two players out of major contention).

It really seems like AT&T is trying to pay to buy out competition, and this document proves that their previous purchase justifications were less than honest. You have to agree that it has at least a little bit of stinky smell to it, no?

Anonymous Coward says:

Re: Re:

They won’t GET the customer base. I’ve been a happy T-Mobile customer since the company was Soundstream (11+ years). If the deal goes through, I am gone — 100% guaranteed. It’ll be “hello Sprint”. In the meantime, the spectre of this competition-eliminating spectrum grab has kept me from getting new phones on T-Mobile and more services, though I currently have 5 phones with them on a family plan (no contract). They are the only company with many of the services they offer and have excellent customer service with second-in-the-US coverage.

Danny (user link) says:

Re: Re: Re:

But more than likely people like you (who will jump ship) are in the minority. In fact I’ll bet AT&T has already accounted for folks like you as “acceptable losses”. In other words AT&T has no problem with a couple thousand people leaving after the merger because in exchange they are eliminating a competitor. And that’s the important part. Not the infrastructure. Not the technology. And damn sure not the customers.

In fact the cell phone market might be on its way to looking like the video game console market (a very small handful of competitors).

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