While AT&T customers can clearly see the benefits of a merger with T-Mobile, customers of the company being acquired are having a difficult time seeing what’s in it for them. What will happen to T-Mobile’s current data plan offerings? Will handset releases slow down? How will this effect my monthly bill? The questions are plentiful and, unfortunately, many of them are unanswered at this point. Yet while the questions outnumber the answers, there is one thing I’m pretty certain of: whether this deal goes through or not, T-Mobile customers are going to benefit.
When you look at the AT&T, T-Mobile deal from a very high level, it looks like a disaster for customers of the latter company. AT&T, a carrier with higher plan prices and more money, swallowing up a smaller rival with more competitive rate plans and an impeccable customer service record. The company that was once dissolved into pieces for its market monopoly in 1982, is slowly beginning to put the franchise back together.
It’s only when you start to really dig into the terms of the agreement that you begin to realize what this deal actually means for T-Mobile and its customers. And how, if the deal were to be denied by U.S. regulators or scuttled by AT&T, there is still something in it for T-Mobile consumers. No matter which way the regulatory ball falls, T-Mobile’s customers win.
The terms of the deal are still very liquid, but a preliminary agreement has been announced by both parties. In exchange for $39 billion in cash and stock, AT&T will acquire T-Mobile and, more importantly, its portfolio of spectrum licenses. If approved, AT&T will take most of T-Mobile’s AWS spectrum and repurpose it for its future LTE rollout. A rollout that, if all goes according to plan, will blanket 95% of the population in the continental U.S. with sweet, sweet Long Term Evolution radio waves. AT&T will also assume control of T-Mobile’s network infrastructure, giving the company access to more towers and equipment in locations across the country. The combination of increased spectrum and networking equipment is expected to ease cellular-data bottlenecks that are very familiar to those who frequent major metropolitan areas like New York and San Francisco with AT&T devices. The hordes of T-Mobile customers — all 33.7 million of them — will be folded into AT&T and benefit from these investments and divestments as well.
But what if the deal falls through? What if U.S. regulators squash the deal or AT&T finds the nearly $40 billion premium too hefty? T-Mobile customers, and Deutsche Telekom, will still make out just fine. In a conference call this morning, AT&T announced that if the merger is unsuccessful, it will pay T-Mobile USA $3 billion for its troubles. But it doesn’t stop there. AT&T will transfer to T-Mobile any of its AWS spectrum that is “not critical” to its initial LTE rollout and enter a roaming agreement with the carrier that will give it coverage in areas where T-Mobile does not overlap with AT&T. Again, T-Mobile customers will benefit from more spectrum and more coverage.
The big question that most T-Mobile customers will have — especially those who don’t know or care what “spectrum” is — will be, “will my monthly wireless bill increase?” And those are answers we may not have have until long after the deal is done. In the meantime, what I can tell the T-Mobile faithful is this: whether the deal goes through or not, you will definitely win from a network prospective.
