ATT to Purchase T-Mobile: Sprint Nextel Out in the Cold as Nation Faces GSM Monopoly

The Internet Patrol - Patrolling the Internet for You
  • ATT to Purchase T-Mobile: Sprint Nextel Out in the Cold as Nation Faces GSM Monopoly


Why yes, we did, not two weeks ago, tell you of a possible T-Mobile merger with Sprint Nextel. However, it seems that AT&T had other ideas, and has made a flat-out aquisition bid for T-Mobile USA, to the tune of $39 billion. You just know that the resulting love child – IF the deal is allowed to go through, as it creates one hell of a monopoly – will have to be called, even if not officially, AT&T&T-Mobile, or, just, AT&T&T.

Moreover, it turns out that Sprint had no idea, until just yesterday, that T-Mobile USA was also negotiating with AT&T while leading Sprint on, let alone that they were that close to cutting a deal with them, leaving Sprint Nextel in the dust.

Both parties are optimistic that the proposed sale will be approved by U.S. regulatory agencies such as the FCC and DOJ, but we’re not so sure. AT&T acquiring T-Mobile USA wouldn’t just make AT&T one of the largest carriers in the U.S. – it would make them the only GSM carrier in the country.

T-Mobile and AT&T are the two cel phone providers with GSM networks in the United States, while Verizon and Sprint/Nextel are both on CDMA networks (this is why AT&T and T-Mobile have SIM cards, while Verizon and Sprint/Nextel do not). Where a Sprint – T-Mobile merger would have still left two GSM carriers (AT&T and Sprint/Nextel/T-Mobile) to compete with each other, if AT&T gobbles up T-Mobile USA, there will be only one GSM carrier: AT&T&T-Mobile.

Get notified of new Internet Patrol articles for free!

And for that reason, we think that it’s going to be a bit harder to to get this thing approved than either side is suggesting. That said, we can’t imagine why they would think it will be easy – if even possible – which suggests that this may be some sort of political grandstanding play as much as a genuine offer to purchase.

The deal even contemplates a failure to consummate the marriage, providing that AT&T will give T-Mobile $3 billion in cash, along with some current AT&T advanced wireless services (AWS) spectrum, if the deal falls through.

Either way, T-Mobile wins, and frankly, either way AT&T wins, because the deal has stopped dead in its tracks any possiblity of Sprint / Nextel being able to merge with T-Mobile. Sprint’s stock is down 13% and, as financial analyst Kevin Smithen observes, “Given Sprint’s weak balance sheet and the $3 [billion breakup fee for the AT&T/T-Mobile deal], we believe it will be nearly impossible for Sprint to counter. The loss of T-Mobile represents a huge setback for Sprint…]

With a CDMA version of the iPhone and iPad out now, and with AT&T losing their monopoly on selling the devices, it’s to AT&T’s competitive advantage to cut off at the knees any possible arrangement that could change the lay of the competitive cellular carrier landscape.

AT&T’s plan is supported by the union that represents 42,000 AT&T workers, as well. Said Communications Workers of America (CWA) president Larry Cohen, “As with any merger or acquisition involving large entities, oversight issues will be raised. We ask all those involved to balance the inquiry with adequate weight for broadband speed and build out, and employment and workers rights.”

But those issues may be big ones, and that is about all that Sprint / Nextel can hope for at this point.


“The combination of AT&T and T-Mobile USA, if approved by the Department of Justice and Federal Communications Commission, would alter dramatically the structure of the communications industry,” said Sprint in a statement on the matter. “The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the U.S. economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry.”

No Paywall Here!
The Internet Patrol is and always has been free. We don't hide our articles behind a paywall, or restrict the number of articles you can read in a month if you don't give us money. That said, it does cost us money to run the site, so if something you read here was helpful or useful, won't you consider donating something to help keep the Internet Patrol free? Thank you!

ATT to Purchase T-Mobile: Sprint Nextel Out in the Cold as Nation Faces GSM Monopoly

Get notified of new Internet Patrol articles!
  • ATT to Purchase T-Mobile: Sprint Nextel Out in the Cold as Nation Faces GSM Monopoly

Leave a Reply

Your email address will not be published. Required fields are marked *