AT&T’s pursuit of T-Mobile looks like it will be coming to an end because of opposition from the Department of Justice and the FCC. In a conference call on November 29th, the FCC announced that it will grant AT&T its request to formally withdraw its application to acquire T-Mobile, but where does that leave Magenta?
Dropping like flies
There is no doubt that this news will excite many T-Mobile subscribers, as they thought the deal would lead to no good anyway, but AT&T pulling out of the proposed take over of T-Mobile might mean that T-Mobile could have some dark days ahead of them.
During the last 3 quarters, T-Mobile has dropped an alarming 1.2 million contract customers. This means that while the nation’s fourth largest wireless operator will have 33.5 million customers overall, only 25.2 million of them are on contracts, with many of those customers stating that they will not renew their deals when their contracts expire.
T-Mobile is losing customers mainly because it has always been regarded as a value player. The company has always been able to attract new customers by offering low prices on good wireless packages, but since the merger was announced, the aggressive pricing that T-Mobile has used in the past has stopped.
T-Mobile is also losing ground when it comes to having the latest and greatest handsets available. This is highlighted by the fact that they are the only national player that does not carry Apple’s iPhone. This coupled with the lack of good deals means that T-Mobile will be facing a huge fight when it comes to turning their ship around, and it will have to have a strong plan in order to be able to compete again.
A new start
So where does T-Mobile go from here? They could try and put a deal together with another carrier to purchase them, but it is highly unlikely that another company will offer the $39 billion that AT&T offered, or T-Mobile could try to rebuild its brand and its image in the value market along with Boost Mobile, Virgin Mobile, Metro PCS and Cricket. If T-Mobile chooses the later they will instantly become the largest value player in the American market.
If T-Mobile chooses to sell, one option could be selling to another of the existing value market companies. If MetroPCS, Boost, Cricket, or Virgin Mobile decide that they want to expand their business, T-Mobiles assets could prove to be invaluable.
Whatever Magenta decides to do, it is obvious that T-Mobile’s days of being a major carrier will be over, and the remaining big three (Sprint, Verizon, and AT&T) will be the only major players left.
While T-Mobile fans will be excited by the news about AT&T withdrawing their application, one has to come to the conclusion that the nightmare for T-Mobile will be ongoing for quite some time. T-Mobile losing their status as a major player will likely mean that many jobs will be cut, and T-Mobile’s ability to attract and afford the latest and greatest phones will be severely harmed. There is no doubt that 2012 will be a year of rebirth and restructuring for T-Mobile.
Source:
Engadget, FCC Accepts AT&T’s request for Withdrawal, By Brad Molen