AT&T's Proposed $1.5 Billion Leap Wireless Buyout Is Hardly a Slam Dunk
"If AT&T is allowed to remove Leap from the market, the customers it serves, particularly minority and low-income communities, will be disproportionately affected, and might have nowhere else to go." But in reality, those people do have options. T-Mobile has been aggressively marketing its contract-free and prepaid plans that substantially undercut AT&T's plans. AT&T has already begun responding to T-Mobile's push with its own prepaid plans and recently with its own frequent-upgrade plan, called Next. At first look, it would appear that AT&T is doing more than simply trying to pick up Leap's spectrum and dump its poor and credit-challenged users out into the cold. As you might expect from today's telecom environment, AT&T's announcement loosed a round of wild speculation among Wall Street analysts, some of whom seem to have lost their grip on reality. Regardless of what AT&T does, this merger isn't happening now. It doesn't currently involve any company other than Leap Wireless. And it doesn't necessarily mean that we're on the verge of some kind of apocalyptic buying frenzy that will suck the entire wireless industry into a monopolistic black hole as some analysts might want you to believe. But that also doesn't mean that other acquisitions won't happen. Dish Networks has been looking around for deals and could decide to offer itself and its spectrum to AT&T. Because Dish isn't a wireless carrier, a deal between Dish and AT&T would face far less scrutiny than the announced deal with Leap. It's also possible that SoftBank, once it gets farther along in digesting Sprint, may look for another carrier. It's even possible that T-Mobile will look for another deal, although right now that carrier is just starting to incorporate MetroPCS.Right now it's impossible to say whether AT&T will be successful in acquiring Leap. There's already opposition, and the announcement is only a few days old. But there's no question that AT&T has learned something from the attempt to buy T-Mobile. But is it enough? There's no way to know now.
Given the difficulty and scrutiny that goes along with a wireless telecom merger these days, it seems unlikely that there will be the sort of mania that some in the financial community seem to think there will be. The DoJ and the FCC move with deliberate speed, meaning even a fairly simple merger with little opposition moves at a snail's pace. Mergers and acquisitions between larger entities will go even slower.