AT&T claims synergy with T-Mobile, but history casts doubt

AT&T claims synergy with T-Mobile, but history casts doubt
AT&T's proposed acquisition of T-Mobile has been met with serious skepticism, and even anger from T-Mobile customers. But despite AT&T's best efforts to paint a picture of perfect harmony between the two carriers, most people, including regulatory bodies, remain skeptical.

AT&T is now promising that the 'synergy' created by the acquisition would offset the $39 billion purchase price. "But how?," you might ask. AT&T says that the synergy will increase smartphone penetration and data ARPU (average revenue per user), while saving money from the network overlap, reduced churn (a.k.a. customer turnover), and spectrum purchases.

But even though AT&T has claimed a "run rate of $3 billion three years after closing onward," experts are quick to point out AT&T's broken promises of the past. AT&T's acquisition of Bell South in 2006 promised run rates of $2 billion by 2008 and $3 billion by 2010, thanks to diminished staffing and advertising costs.

But their margin of earnings before interest, taxes, depreciation, and amortization ("Ebitda"), only grew from 34.5% in 2006 to 34.6% in 2008. And profits were barely increased. So is AT&T just blowing smoke with their promises of synergy with T-Mobile? Maybe not. For one thing, they need the spectrum. And for another, their savings from advertising, staffing, etc. will be significant. But even if they can produce a more powerful, affordable network for both sets of subscribers, it still might constitute a dangerous monopoly.

source: Wall Street Journal via FierceWireless

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23 Comments

1. ATTCallCenter unregistered

Who cares if prices go up? It's called inflation, it's in the Geneva Convention, look it up!

2. ILikeBubbles

Posts: 525; Member since: Jan 17, 2011

lol inflation. anyone thinking Post WWII Germany? No big right? Thanks ATT Call Center! :)

3. Super Android Evo unregistered

Is ATTCallCenter guy for real, I do like the history lesson. The economy is not as good as it should be, I don't know if you have noticed? Prices going up are not what people want right about now. Gas is a rape and we really don't need more expensive cell service pricing. IF AT&T makes their prices more expensive people will most likely switch to another cheaper alternative thus hurting themselves, now is NOT the time for a price increase!

4. ATTCallCenter unregistered

ATT is exactly like Nazi Germany, cell phones are a dictatorship. We dictate the price and you buy. I really don't even care though, I don't even have ATT for cell service I just work here. Let alone work here, they are thinking about canning us for not having good enough ratings at my call center. Good thing there is a Spring center nearby that pays almost double. My app is already in P.S: I have Verizon

5. luis_lopez_351

Posts: 951; Member since: Nov 18, 2010

I heard somewhere on phonearena that if the merge fails At&t still has to pay T-mobile,not the whole 39 bill.$ but like 3% of it. is it true?

6. Super Android Evo unregistered

Yes I think it was 3 billion or something like that! Well that is what I remember reading.

8. cybervlad81

Posts: 89; Member since: Apr 04, 2011

T-mobile wins what ever happens...., hell, if it doesn't happen, T-mobile gets a chance to catch up and roll with the big boys. "In the event of the deal failing to receive regulatory approval, AT&T will be on the hook for $3 billion to T-Mobile -- a breakup fee, they call it -- along with transferring over some AWS spectrum it doesn't need for its LTE rollout, and granting T-Mo a roaming agreement at a value agreeable to both parties."

12. snowgator

Posts: 3617; Member since: Jan 19, 2011

Didn't know about the spectrum. Hope it falls through.

13. midnight98

Posts: 5; Member since: Jan 27, 2011

So I guess the question is how much spectrum is not needed for the LTE rollout. If it is alot, then T-Mobile is probably praying that the merge doesn't go through. And on top of that they get $3 billion...not a bad consolation prize. As a T-Mobile customer, I prefer that the merge does not happen. I've had the myTouch 4G since February and this is probably the best phone I've ever had (yes its my first Android). Despite the coverage issues I hear everyone complain about, they have great phones and great plans, and the "4G" is very fast when I'm in a 4G area.

17. luis_lopez_351

Posts: 951; Member since: Nov 18, 2010

Lmfao i think T-Mobile di this on purpose :D Kudos for them for ripping off the biggest rip off company :) but yeah if merge happens Hell! im loosing my Blackberry and Nokia Astound -__- and my Unlimited data plan.

7. snowgator

Posts: 3617; Member since: Jan 19, 2011

Just imagine how bad it is gonna get when AT&T ramps up it's PR efforts as this deal slowly inches it's way though hearing after hearing. The moon, sun, stars, and puppies that are already house broken will be promised with smiles on every Three piece suited executive face. Nothing bad can happen, just stamp approval here.... To paraphrase Mr. Berra: It's gonna get late early around here.

9. remixfa

Posts: 14605; Member since: Dec 19, 2008

yea, you have darth vader promising to be good after killing the padawans. Anyone believe him?

10. DonMateo unregistered

Wow i never seen so many complainers, Stop complaining about issues you have no control over either suck it up or move to another carrier. People with T-mobile should of predicted this about a year ago if you really do keep up with history. p.s this comment is for the future bloggers who will complain as well that are not yet posted

11. snowgator

Posts: 3617; Member since: Jan 19, 2011

Or, you can stop complaining about the people you call complainers. Never understand people who blog to whine about bloggers. Just move on. We post because it interests us. You post ... okay. I give up. Why do you post?

15. downphoenix

Posts: 3165; Member since: Jun 19, 2010

the man just exudes evilness, you can tell by looking at him. Basically, price increases and totalitarian rate plans to look forward to.

16. Slammer

Posts: 1515; Member since: Jun 03, 2010

Phonearena says: "So is AT&T just blowing smoke with their promises of synergy with T-Mobile? Maybe not. For one thing, they need the spectrum." There is nothing T-mobile has that ATT doesn't already have. ATT has a stockpile of spectrum they acquired from past auctions that they haven't used. Plenty to go around. The sole purpose of ATT's purchase, is nothing more than preventing t-mobile and Sprint from creating a third major contender in the US. That is why their interest for TMO seemingly came out of nowhere. John B.

18. T-Mobile DJ unregistered

Fact of the matter is this, based on what I have witnessed in this industry for over 10 years, the customers will be able to keep their current rate plans. And guess what, the smart comsumer would come to T-Mobile now and get locked into an affordable rate plan. If the AT&T deal does go through, they can always buy a full priced handset from AT&T without switching their rate plan, and the beauty of it is the fact that there are many non-AWS unlocked phones you can buy also. I'm sticking with T-Mobile and keeping my rate plan for as long as I can!

20. snowgator

Posts: 3617; Member since: Jan 19, 2011

Best idea ever. I bemoan having no T-Mobile in my area every other post. Very good plans, good reception in the areas they offer, and an array of appealing phones. To get on a plan now with a good device (hello there, HTC Sensation!!) and ride out the wave with it for as long as you can is a great idea. Problem is, AT&T does not care even 1 iota about affordability. Sooner or later, these good plans from T-Mobile will become AT&T's plans, which are competitive with Verizon, but more steep the Sprint, T-Mobile, or regional carriers such as Cricket. I believe Sprint will become more viable as they continue to improve signal and device choices, and another carrier will grow into a nationwide fourth option over time. It is just a shame to loose that option now. Kinda like Verizon terminating 1 year contracts- not a whole ton of people used them, but wasn't nice to have the choice?

24. Androidluv

Posts: 65; Member since: Jul 13, 2010

That is what I am going to do. AT&T cannot force you to change your plan unless you choose to upgrade to one of their phones. When I worked in retention with AT&T, there were customers who still had old regional plans from mergers and buyouts long gone. So, the best thing to do is find and keep ur fave plan with T-Mobile and DONT BUDGE!!! You should be able to stay that way for as long as you want.

21. aht4545 unregistered

Stop bitching about their pricing and their data plans. You can't have unlimited data and a cheap phone bill. AT&T is way cheaper than verizon. They took away the unlimited data so you would have a cheaper alternative and still be able to afford a cool phone. You can't have your cake and eat it too. Hopefully if this t-mobile deal goes through at&t may offer unlimited date again because they would have more towers to support a heavier data load.

22. remixfa

Posts: 14605; Member since: Dec 19, 2008

are you serious??? really?? ATTs unl voice/text and 4gig data plan is MORE EXPENCIVE than VZW unl EVERYTHING. ATT is the MOST expencive carrier in the US. Tmobile is the cheapest. They are buying up their only reason to come down in price... competition.

25. Androidluv

Posts: 65; Member since: Jul 13, 2010

YES YOU CAN have unlimited data and a cheap phone bill. With T-Mobile, I was paying 79.99 a month before taxes for unlimited talk+text+web on my blackberry. My friends on AT&T could not believe it. AT&T had unlimited plans, but they removed them to make room on their network. They just cooked up a reason, spiced it up with words like affordability and what not and sold it to gullible folk. Apparently, you bought the reason :-) Besides,what's the use of having a cool phone and an 'awesome' network when u cant use it to its fullest?? That like buying a ferrari when u know you are only allowed speeds of 45mph!!!

23. mr4glover unregistered

I work for At&t and have Sprint. All i get everyday in the store is why dont we have unlimited and where did all these charges come from lol...

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