In a blockbuster move that could have serious ramifications on the wireless industry, AT&T announced on March 20 that it plans toacquire T-Mobile USA from Deutsche Telekom in a deal valued at about $39 billion. The combined company will have nearly 130 million subscribers if the deal is able to make its way through regulatory approval.
When AT&T announced its deal with T-Mobile USA, it was clear from the beginning that Verizon, AT&T’s chief competitor, would be in for some trouble. For years now, the companies have been jockeying for first place in the U.S. wireless business, in terms of subscribers. And it’s clear now that if AT&T secures T-Mobile USA, Verizon will have some serious work to do if it wants to catch up.
But that doesn’t mean all is lost for Verizon. Quite the contrary. The company can do quite a bit to resist the T-Mobile acquisition and fight back against AT&T becoming a dominant force in the industry.
Read on to find out what it can do:
1. Take the fight to Congress
In order for AT&T to get its hands on T-Mobile,the company must get through regulatory approval that most believe will take a substantial amount of time. Over the next several months, Verizon must take its case to Congress and explain why it believes the merger between the companies is bad for consumers and the industry as a whole. It has significant clout in Washington, D.C. The time has come for Verizon to put that clout to good use to block this deal.
2. Make Apple see its point
So far, Apple hasn’t said how it feels about AT&T trying to acquire T-Mobile. Since the beginning, AT&T and Apple have been close allies. But if AT&T secures T-Mobile, the company will have more leverage than ever. AT&T might use that leverage to impose its will on Apple. Considering Apple and Steve Jobs typically don’t respond well to that, maybe Verizon can play the good guy with that company. As much as it might not like it,Verizon should be more willing to accept Apple’s terms going forward. Such a response could make Apple view Verizon more favorably and possibly give it preferential treatment when new iPhones are launched. At this point, Verizon needs all the allies it can find.
3. Double down on Android
Google’s Android platform has proved extremely successful on Verizon’s network. But it’s not the only carrier selling Android-based devices. All four carriers are. But after AT&T buys T-Mobile, Android handset makers will have only one GSM carrier to work with, which means they lose all their leverage if they want to offer a GSM device. If Verizon can find a way to use that to its advantage and offer more favorable terms to Android handset makers, the company might be able to solidify itself as the go-to carrier for Android devices. If it can do that, given Android’s growth as of late, it might be able to close the subscriber gap against the greatly enlarged post-merger AT&T.
4. Speak to the consumers
In an industry where there are few companies competing for consumers already, consolidation usually doesn’t bode well for customers. Realizing that, Verizon should try to take its message to consumers to get them to rebel against the AT&T-T-Mobile USA deal. Moreover, if the deal goes through, Verizon should make itself look like the victim, the “good” force against the “evil” giant. In most cases, consumers respond well to that.
Best Strategy: Keep Customers Happy
5. Reassure enterprise customers
Right now, enterprise customers are undoubtedly concerned about the impact the AT&T acquisition of T-Mobile USA might have on their operations. What does it mean for their plans? How will it affect service?All of these questions remain unanswered. Although AT&T says things will improve, that’s not always the case. Verizon should remind enterprise customers that Verizon is the stable choice. When they work with Verizon, they know what they’re getting. Consistency matters to enterprise customers. Verizon should use that to its advantage.
6. Don’t acquire Sprint
When Verizon’s top executives walked into the office on March 21, they might have thought that acquiring Sprint would be the next logical move to stem AT&T’s growth. But that’s perhaps the last thing Verizon should do. Sprint isn’t an attractive buy. It would be too costly, and the net gain in subscribers wouldn’t be nearly as great as the company would like. For now, Verizon must hold on to its cash and keep trying to build its subscriber base. Trying to do so with Sprint would be a mistake.
7. Win on price
Who knows how AT&T will structure its service charges after T-Mobile is finally acquired? Although the company says it will benefit customers, there’s no telling if prices will go up, data rates will change or any number of other oddities will arise. If Verizon wants to overcome this acquisition, it needs to start winning on price now. It can reduce service charges, continue to offer unlimited data over 3G and invest in other money-saving opportunities for customers that will not only help it retain current subscribers but add more.
8. Focus on the service
Currently, Verizon has the market cornered in one key area:It’s the best service provider in the space. The company must maintain that lead at all costs. No matter how many subscribers AT&T might have or cell towers it puts up, Verizon should always stay one step ahead on mobile phone service. If customers see better coverage from Verizon, they won’t stick with AT&T. It’s as simple as that.
9. Reassure investors
As a public company, Verizon has a responsibility to maximize shareholder value. But it can only do that if it has a plan to be better than every other company in the market. Right now, it should be working on a plan to limit the impact AT&T’s T-Mobile acquisition will have on its operation that it can bring to investors. Its shareholders need to be reassured that it can handle this bit of adversity. One of the first orders of business should be addressing that.
10. It’s time to advertise
Verizon has always had a big advertising budget, but now that AT&T has plans to take over T-Mobile USA, the time has come for the carrier to spend even more. Verizon needs to push its best offers, talk about its best devices and gloat about its coverage. It needs to blanket the airwaves making it clear that it delivers the best offering of any company in the market. With T-Mobile USA in tow, AT&T will be a huge force. Verizon can limit its power if it can start to win customers one by one starting today.
