ATandT, Deutsche Telekom Could Still Salvage T-Mobile Deal

 
 
By J. Gerry Purdy  |  Posted 2011-12-24 Print this article Print
 
 
 
 
 
 
 

NEWS ANALYSIS: A merger between Deutsche Telekom and AT&T would save T-Mobile so it could get the spectrum it needs, as well as focus on prepay and reseller partnerships.

With the AT&T acquisition of T-Mobile now dead, the future of T-Mobile is uncertain. The wireless carrier doesn't have enough wireless spectrum to compete in the 4G market, and the company lacks what every other major carrier now has-the iPhone. 

T-Mobile also doesn't have anywhere near the large number of subscribers as Sprint, Verizon Wireless and AT&T Mobility. The company looks like a small country bride who was left at the alter by the big, rich kid.

However, there's one scenario left that could both save T-Mobile and allow AT&T to become a truly international telecommunications company. This scenario would have AT&T do a "reverse merger" with Deutsche Telekom with the combined companies called AT&T. It would be a reverse merger since Deutsche Telekom merges with AT&T but then become AT&T. That combined company would then own T-Mobile.

Since Deutsche Telekom already owns T-Mobile, this reverse merger would allow the new AT&T to keep T-Mobile as a separate company that could focus on specific markets such as prepay and wholesale agreements.

Ren??« Obermann, the chief executive of Deutsche Telekom, has stated publicly that he wanted to find a viable outcome for lagging T-Mobile. He should sit down with Randall Stephenson, CEO of AT&T, and discuss how the two firms might establish a truly international telecommunications company.

One immediate benefit would be to allow AT&T and Deutsche Telekom customers to roam within their combined network.

For example, U.S. subscribers would be allowed to roam in Europe as if it were an extension of the United States. The combined companies would have more than 130 million subscribers.

Just as the acquisition of AT&T Wireless by Bell South resulted in the combined companies being named AT&T, the Deutsche Telekom merger with AT&T could end up in a similar manner.

This helps resolve the future of T-Mobile since the parent company of T-Mobile would be the same company. Sure, the reverse merger would have to be approved by the International Telecommunication Union (ITU), as well as by antitrust regulators in Europe and the United States, but they would see it as a European firm getting access to one of the top brands in the world.  

T-Mobile could be used by the new AT&T as a channel for alternate distribution channels including prepaid and wholesale. AT&T could easily get the iPhone approved as well.

The new AT&T would be able to compete in the global wireless communications market. The company would have a clear path to becoming a global communications operator. Companies that operate internationally or have employees who do a lot of international travel would benefit from having one company in which they can use their wireless both in the United States and internationally without getting hit with significant roaming fees.

This would be a win-win-win scenario. T-Mobile wins by doing nothing and the company also gains the resources of Deutsche Telekom and AT&T. AT&T becomes the most significant global communications company, and Deutsche Telekom gets one of the most important brands ever created. Sure, Deutsche Telekom management would have to be integrated with AT&T, but that's a short-term activity compared to the long-term benefit of creating a powerful international telecommunications company.

 
 
 
 
J. Gerry Purdy, Ph.D., is Principal Analyst of Mobile & Wireless at MobileTrax LLC.
Dr. Purdy has been covering mobile, wireless, cloud & enterprise for the past 20+ years. He writes analysis and recommendations each week in an easy-to-read manner that helps people better understand important technology issues and assist them in making better technology purchasing decisions.

Disclosure Statement: From time to time, I may have a direct or indirect equity position in a company that is mentioned in a column. If that situation happens, then I'll disclose it at that time.
 
 
 
 
 
 
 

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