|Graphic Credit ARS Technica|
AT&T made it known that they were withdrawing the bid and as a result would "recognize a pretax accounting charge of $4 billion" which is a combination of a breakup fee AT&T agreed to pay T-Mobile plus spectrum rights worth another $1 billion.
How does this play out for the two companies, and how does it play out for consumers? AT&T will pay the $4B and avoid the $39B acquisition cost. They'll continue on as an industry giant, largely unaffected. They'll move on to other approaches to expansion.
What about T-Mobile? T-Mobile, who has been struggling along in 4th place gets some short term cash but their prospects for the future are no better. ARS Technica called it “something of a strategic triumph for T-Mobile and its parent company, Deutsche Telekom,” based on the cash infusion and a new set of roaming agreements likely between AT&T and T-Mobile parent Deutsche Telekom. But it isn’t clear to me that either of these development would be enough to save T-Mobile. Eweek explores some possible fallout, and it makes for an interesting read.
If the reason to oppose the merger was to avoid too much market consolidation, and to preserve consumer choice (good goals!), what happens if T-Mobile fails or quickly becomes irrelevant even without the merger? Did consumers win?
AT&T makes some of these arguments and I'm not sure that they are wrong in this case.
Do you have thoughts on how this plays out for consumers? Will T-Mobile prosper after this failed acquisition? Please share your comments here.
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