If the T-Mobile deal doesn't go through, AT&T could lose US$6 billion
In previous reports, AT&T admitted that the cancellation of their deal would result in a $3 billion payout to T-Mobile. But now two unnamed sources say that AT&T would also have to transfer about $2 billion worth of spectrum, and a roaming agreement worth $1 billion.
Reuters reports that the cash value ($3 B) is already high, at about 7.7% of the deal's value. But combined with the spectrum and roaming agreement, the 'break-up fee' would be 15.4% of the total deal, and break all global records for such an arrangement.
So why is AT&T offering such an incredible cancellation/consolation prize? In part, it's a sign of their confidence that the deal will go through. But we think it's also meant to convey an inevitability to the landmark merger.
The most valid question might be this: Does the value of the 'break-up fee' mean that T-Mobile wants cancellation more than they want approval for the deal? Fortunately for AT&T, the $2 billion allotment for spectrum would only buy about 10MHz. And while that would increase T-Mobile's high-speed data capability to 150% of their present capability, their LTE service still wouldn't be competitive with AT&T and Verizon.
3. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)
i still see absolutely no reason why att shud not be allowed to do this if they have the money... it is going against the market economy... this is communism right here!!!!!!!!!!
5. Colofax (unregistered)
Well, if the government is a communist state, then AT&T is the Nazi party.
Put that in your pipe and smoke it.
7. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)
how? explain... and i never said a communist state, but this is a command economy move... although not a true one, it still isnt a market economy one...
21. remixfa (Posts: 14255; Member since: 19 Dec 2008)
because its anti competitive and it creates a duopoly that will never be removed from the market without government intervention to break up the companies.
oh wait.. the government already broke up ATT into smaller companies, and then competition thrived like it never did before in the industry. now your arguement is to let them be bigger than they were when they broke up. i wonder how that's going to turn out for everyone.
27. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)
it will spur verizon to actually get some decent phones... people will switch to sprint for their lower prices... i understand that it is not ideal, but i do not think att shud be limited at all... the government should not be able to tell them no they cant use the money they worked hard for...
30. Duh (unregistered)
Its not that government is saying how they can and can not use their money. if the government negates the transaction it would be on the basis of why this country was founded. More than likely the cell phone industry will consist of a duopoly, That limits freedom of choice. other competitors may leave the market or can not sustain a valuable product. The People will be left with basically At&t Or Verizon. if I am a phone or tablet manufacturer, do I sell my product to through verizon who has close to a 100 million clients, post AT&T merger who will have over a 120 million clients, or Sprint who may have 60 million clients depending on who leaves after the merger, or finally a regional carrier. All day I will choose either of the first two. there will be more opportunities for people to buy my product.
29. Duh (unregistered)
Lucas was only stating a fact, if the government does intercede and prevent it would be a command economy move and if they dont it would be a market economy move that would resemble a mixed economy. I doubt the FCC or Senate will allow the transaction outright. They probably will institute a stipulation.
2. Sniggly (Posts: 7253; Member since: 05 Dec 2009)
Oh wow. I love how the regulators are all over this deal, as if the government is the only entity allowed to be a monopoly.
6. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)
completely agree... they allow current monopolies! such as google... and no dont get all upset but google has a monopoly on search... and they allow apple a monopoly on ipods... im not saying that shudnt be so, cause it is perfectly fine... but idk why att cant do this...
22. icepikk (Posts: 32; Member since: 13 Feb 2011)
Google doesnt have a 'monopoly' on search, it just happens to be the most widely used. People have their choice out there and it isnt costing them anything to search google, or bing, or yahoo or anything else. Apple has a monopoly on "ipods?" An iPod is a specific brand of a certain device, not the name of a widespread device, such as mp3. Again, there are a lot of companies out there with mp3 players that consumers can buy, and at a lower price. People choose iPods because of their easy integration to iTunes, brand name, and other little things. Not to mention most mp3 players are poorly designed. The difference between those two and the merger is that there is no major hit to competition. You are locked into a contract, paying a monthly fee with a cell phone and if there is no real competition besides with Verizon's already high prices, then AT&T has no reason to have lower ones, because it already knows people dont have much of a choice if they want nationwide service.
28. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)
yes, google does have a monopoly on search... they almost exclusively control it, and yes it is the peoples choice, but it is also the people's choice to use att and not say sprint... and fine, i meant mp3.. and why shud att suffer becuase verizon wants to make money? i know it sucks and it shudnt be alright, but att shud not be limited for their good work...
34. hellosies (unregistered)
That's just straight ignorant, dawg.
35. icepikk (Posts: 32; Member since: 13 Feb 2011)
It is people's choice to choose AT&T over others like Sprint. But what you're not getting is Verizon and Sprint are CDMA networks, while AT&T and T-Mobile are GSM. Some people prefer GSM, mostly those who travel to other countries and dont wanna buy a World Phone from Sprint or Verizon and also like the simplicity of just switching out Sim cards. If AT&T takes over T-Mobile, they will be not only the largest GSM network by far, but the only real choice for nationwide coverage. Plus, again, you cant have a monopoly if there are other competitive choices, like Bing and Yahoo. They may not be Google, but they dont compare in terms of recognition and size with Google like say, AT&T to U.S. Cellular.
4. Colofax (unregistered)
AT&T screwed most of us that were "transfered" from Alltel, I hope for T-Mobile's customers' sake this deal doesn't go through.
AT&T's employees are Hellspawn, top to bottom.
16. MammaH (Posts: 2; Member since: 21 Mar 2011)
Hello: Alltell was gobbled up by big red (Verizon) as they are the same technology (CDMA) and T-Mobile and AT&T are the same technology (GSM). It would be financial suicide for opposing technologies to merge. Unless of course, the purchasing entity had unlimited funds to rework all the purchasees towers and infrastructure. Do you have any idea how much that would cost??? more than one would realize.
31. daxdroid (unregistered)
Alltel was NOT gobbled up by Verizon. Verizon had to sell part of Alltel as stipulated by the FCC. Verizon uses CDMA as the technology however they do own GSM spectrum, as AT&T owns CDMA. It’s normally obtained during the acquisition and they lease it out in their roaming agreements. But anyways, AT&T should be allowed to purchase T-Mobile so they can fall flat on there face. They like to deceive the public and we don’t like ugly. They have acquired spectrum that they haven’t activated and now crying to deceive us. If they were smart they would of started building out there LTE service when Verizon did and the Irony about this Sprint and small carrier was about to deploy WiMax as crappy as it is first. I say let them, cause they will fall. Its not how big you are, its how you treat your customers!
36. Cabose1988 (Posts: 9; Member since: 24 Apr 2011)
I agree it does come down to how you treat your customers
8. sacky (unregistered)
There is no place in a thriving democracy for a deal like this to go through. It should be blocked solely on the basis of anti-trust.
9. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)
no there will still be verizon and sprint... and i do not see why it violates the anti-trust law when they are not creating a sole monopoly... they are even promoting verizon and sprint to keep their prices down... its not just att out there... there are four companies that hold a large amount of market share... if it was just att and tmobile then it would violate the law... and i believe part of this law is wrong anyways if it stops an opurtunity for att such as this... the way i see it, att will be even better and if u dont like it there are plenty of other options... following that, it isnt a monopoly at all and all this sprint insisting it a monoply crap is retarted
10. downphoenix (Posts: 2687; Member since: 19 Jun 2010)
please say it is so, atnt losing $6 billion for nothing is a beautiful sght.
14. Amoeba (unregistered)
@Colofax: I am not hellspawn.
15. joey18 (Posts: 574; Member since: 20 Jul 2010)
Why att has to go goverment permision to buy tmo this is not third world country america is free you got money you buy whatever you wan
17. MorePhonesThanNeeded (unregistered)
Some folks in here need to take an economics course or 2, what are you not paying attention to the smaller cell providers in the rural areas all over the country. At&t/T-Mobile merger would make it harder for these little guys especially for the GSM based carriers to be competitive. Sprint is fighting this because that would put them in a very distant 3rd place and give At&t an almost monopoly on the GSM technology front, in all markets in the US. Well it's up to the regulators now to ensure fair competition in the markets instead of At&t using their weight to get the best phones for their line up. Can't guarantee that then this deal is shot.
18. donpeppino9 (Posts: 67; Member since: 24 Jan 2010)
the deal will go through. as long as the fcc does a good job of forcing att to redistribute some of its licenses to other carriers, competition will continue to be fierce. with tmobile out of the picture there will always be opportunity for other existing competitors to take its spot. sprint will get a surge and regional carriers will take on more customers too. america is broke, if the big 2 charge too much, people will end up choosing between food and their cell phone. in the end people who will go with their bellies...
19. jsimmonsjr76 (unregistered)
This merger will only assure that the great customer service and value that we have with TMo will disappear. History has proven repeatedly that mergers like this hurt the end user. They'll be able to screw the other carriers by locking down exclusivities and dominating the market with that "what are ya gonna do, not use a phone??" attitude. TMo was just too late getting in the game, but I very capable. ATT was too busy licking Apples butt to give two craps about backhaul and the rest of their customers. They could've handled the iPhone waaaaaaay better but they simply didn't care. Al Franken basically tricked the CEO of ATT into admitting that. Point being this, the overall quality will suffer. Period. They'll be too big for their own good let alone the consumers. I was a double major, history and business, so I spent a lot of time studying this sort of thing. Leave all the communist / nazi rhetoric at home. This is simply the govt. doing what is right, making sure that we don't get prison raped. History has many examples of the disastrous results of mergers not unlike these. That's why the anti trust laws came about. Before making such brazen calls, get a business degree and read your history. It'll make sense then
20. TKFox007 (Posts: 303; Member since: 02 Nov 2010)
Oh wow, $6 billion, what huge loss for the nation's largest carrier.
That's chump change to them
23. InspectorGadget80 (Posts: 7005; Member since: 26 Mar 2011)
I'm sure lots of T-Mobile customers are happy that AT&T is going to loose the fight. and how can you loose 6 billion dollars. did they gave them the money already just wondering
24. koolaid (unregistered)
I work for a 3rd party att/ sprint/ verizon store. If this merger goes through it not only takes the big 4 down to 3 with att/tmo in astronomical terms verizon and sprint are on earth and att would be at the spacestation... The only other options comparable to the big 3 is prepaid WHICH... is owned and operated by the big 3 anyways. Where I am in the midwest you have the att verizon sprint tmobile and uscellular that is all folks. So talking the number 1 spot and number 4 spot makes 1.5 spot. SO THEN ALL OUR BILLS GO UP 25% BECAUSE THEY CAN! BECAUSE THERE IS NO COMPETITION! so do you really think that the gov. will actually do this? no not without them lubing up the gears with a bunch of money that att will give up not including the 35 bil. for tmob. BRIBERY does work here in the US. Welcome to socialism. YEAH for the UNITED STATES!! where the rich get richer and poor stay poor. (unless you win the lottery, then you can be on the tv show.) This merger is just plain wrong and should not happen and thats comming from an att user of 10 YEARS!!!! it will bite us in the ass in the end maybe not right away but trust me give it 5 months after launch!
25. joedog59 (unregistered)
Here's what everyone seems to be forgetting. about a month or so before att announced that they were going to buy t-mobile SPRINT had been in talks with t-mobile about a buyout but for whatever reason talks broke down and t-mobille decided to go in another direction yet the reality is that sprint was after the same thing that att wanted and that is MARKET SHARE which att is still not guaranteed because t-mbile customers may not trust their new service and may decide to look for other alternatives and those customers as well as new ones will still have 3 choices instead of 4 and the real dog fight will be between verizon and sprint. Sprint can get alot of these cusotmers and more IF and only IF they get the iphone(s), better their coverage (it's good but not great) and stop coming up with those stupid cookie cutter htc evo phones and basically step up their game. Don't forget up and coming metro pcs as they will be coming out with 4G LTE phones between now and by the end of the year and their rate plans are better than anybody elses and their coverage is now over 90% of the country and growing.
If you are a t-mobile customer the smart thing to do is just wait to see if the buyout goes through before you re up for 2 more years but the duopoly everyone keeps talking about is based on 1 network technology (GSM) and if this plays out in the end to be at LEAST a 3 carrier race att still could potentially lose alot of customers so they have to have a plan in place either way.
26. Nick (unregistered)
Anyone who is screaming monopoly on this apparently doesn't remember that the radio spectrum that cell providers use is purchased from the government and is limited. It isn't like McDonald's is on one side of the street and Subway can just open on the other with cell companies. If someone wants to become competition, they have to have spectrum which can only be purchased from the government. Since the government has handed over control of a public resource, they must make sure it is used in the public interest.
The AT&T/Tmobile ought not go through. There will be too few competitors and the public cell radio waves will be in the hands of just a few companies. Other large companies won't be able to just decide to enter the market because access to the market is government controlled.