AT&T to buy T-Mobile

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    Posted: 20 March 2011 07:32 PM #16

    Zeke - 20 March 2011 10:09 PM
    Tetrachloride - 20 March 2011 09:53 PM

    Message boards at Yahoo Finance for ATT (for what its worth) say that ATT stock will take a hit.

    But will AAPL take a jump with a new service provider and a new set of potential customers?  It does bring a new question to my mind.  With AAPL going from $360 to $330 in the course of 10 days, just prior to this announcement, can we surmise that somebody in the hedge fund world saw this coming and worked to tank the stock (and had plenty of ammunition to work with)?  With the amount of financing that had to be arranged, surely the investment banking world was aware of this transaction weeks ago.  Why announce the deal on a weekend with the markets closed?  Are some institutional investors getting their transactions lined up for the market open on Monday?

    Nah!  That would be buying into conspiracy theories.  Couldn’t happen on Wall Street.

    It’s unknown how long it’ll take for T-Mobile’s subscribers to get access to the iPhone.  Any T-Mobile iPhone, I’d imagine, would probably need that 1700MHz or whatever band for 3G access while AT&T and T-Mobile do their “synergistic” thing over a number of years.  I don’t see existing T-Mobile 3G users being arbitrarily kicked to the curb in the next several years or maybe ever because their spectrum was cleaned out for some other use.

    Also, I’d prefer Apple go after markets like SK Telecom (which IIRC has about 50 million subscribers, maybe 50% more than T-Mo) with its ready-to-go CDMA iPhone version, as well as China (TD-SCDMA is different but Qualcomm already supports it).  We’re still in the lowest hanging fruit stage, and with AT&T and Verizon Apple already addresses about 2/3 of the US market.  Good enough for now.

    Some FUD contributed to AAPL 330, but world events take much of the blame (combined with AAPL being a higher beta stock).  Japan stabilizing, earnings run-up, and an actual meaningful iPad launch this Friday should start AAPL on the path back towards 350 soon.

    [ Edited: 20 March 2011 07:35 PM by Mav ]

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  • Posted: 20 March 2011 07:35 PM #17

    Mav - 20 March 2011 10:32 PM

    Some FUD contributed to AAPL 330, but world events take much of the blame (combined with AAPL being a higher beta stock).  Japan stabilizing, earnings run-up, and an actual meaningful iPad launch this Friday should start AAPL on the path back towards 350 soon.

    $360, actually.  grin

         
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    Posted: 20 March 2011 07:36 PM #18

    DawnTreader - 20 March 2011 10:35 PM
    Mav - 20 March 2011 10:32 PM

    Some FUD contributed to AAPL 330, but world events take much of the blame (combined with AAPL being a higher beta stock).  Japan stabilizing, earnings run-up, and an actual meaningful iPad launch this Friday should start AAPL on the path back towards 350 soon.

    $360, actually.  grin

    One increment of $10 at a time, DT.  My poor portfolio is already suffering enough as it is, no need to subject it to the whipsaws of over-optimism.

    I mean, I fully expect AAPL to get past $360 even with all the FUD and dampening forces out there, but it never hurts to be cautious.

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  • Posted: 21 March 2011 01:52 AM #19

    I just can’t believe they’d be able to win a regulatory approval for this.  Itnwould dramatically alter the us mobile competitive landscape.

    Thus low probability of actually happening.

         
  • Posted: 21 March 2011 12:23 PM #20

    iphoned - 21 March 2011 04:52 AM

    I just can’t believe they’d be able to win a regulatory approval for this.  Itnwould dramatically alter the us mobile competitive landscape.

    Thus low probability of actually happening.

    According to who? You don’t think AT&T’s legal team has poured over the terms and developed a strategy? The acquisition ties into the President’s plan for wireless coverage of rural areas and and the parent company doesn’t have the desire to invest the billions needed to remain competitive in the US market.

         
  • Posted: 21 March 2011 12:29 PM #21

    I don’t fully understand the pop in VZ today but am not complaining, as my long standing limit order to sell VZ filled this morning.  I shall return to this oscilloscope stock - love the cyclic nature of buying the dips and selling the rips, earning dividends in between.

         
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    Posted: 21 March 2011 12:33 PM #22

    More importantly, JPM is acting like a bank underwriting the Death Star’s $20B M&A bid.

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  • Posted: 21 March 2011 12:45 PM #23

    adamthompson3232 - 21 March 2011 03:31 PM
    Mercel - 21 March 2011 03:29 PM

    I don’t fully understand the pop in VZ today but am not complaining, as my long standing limit order to sell VZ filled this morning.  I shall return to this oscilloscope stock - love the cyclic nature of buying the dips and selling the rips, earning dividends in between.

    Fewer big players = less pricing pressure/more pricing power. Good for ATT and VZ, bad for consumers.

    Agreed.  ATT is up 20 cents.  VZ is up 80 cents.  I guess the market is saying that VZ benefits more from fewer players than VZ’s risk that ATT adds market share.

         
  • Posted: 21 March 2011 12:58 PM #24

    adamthompson3232 - 21 March 2011 03:31 PM
    Mercel - 21 March 2011 03:29 PM

    I don’t fully understand the pop in VZ today but am not complaining, as my long standing limit order to sell VZ filled this morning.  I shall return to this oscilloscope stock - love the cyclic nature of buying the dips and selling the rips, earning dividends in between.

    Fewer big players = less pricing pressure/more pricing power. Good for ATT and VZ, bad for consumers.

    I don’t think it’s bad for consumers. T-Mobile’s parent isn’t willing to invest what’s necessary to keep the company competitive. This is a US firm buying back a US operation and through this acquisition acquires needed spectrum and infrastructure to improve services and service quality.

         
  • Posted: 21 March 2011 01:52 PM #25

    DawnTreader - 21 March 2011 03:58 PM
    adamthompson3232 - 21 March 2011 03:31 PM
    Mercel - 21 March 2011 03:29 PM

    I don’t fully understand the pop in VZ today but am not complaining, as my long standing limit order to sell VZ filled this morning.  I shall return to this oscilloscope stock - love the cyclic nature of buying the dips and selling the rips, earning dividends in between.

    Fewer big players = less pricing pressure/more pricing power. Good for ATT and VZ, bad for consumers.

    I don’t think it’s bad for consumers. T-Mobile’s parent isn’t willing to invest what’s necessary to keep the company competitive. This is a US firm buying back a US operation and through this acquisition acquires needed spectrum and infrastructure to improve services and service quality.

    DT is right on here. It’s good for consumers. T-Mobile had decided it was giving up on its US business since it was continuing to lose customers even while cutting prices in addition to other efforts. It made no sense for them to keep investing in a national network with such a small subscriber base which was shrinking.

    Thus, if T-Mobile weren’t able to sell the US business, it would have likely harvested it—i.e. cutting investment spending & operating expenses to max cash flow and just let the business die off over time. Knowing this, other carriers wouldn’t be motivated to keep investing/reducing prices because they stand to gain the subs leaving T-Mobile as its service deteriorates. So just because TMO remained independent doesn’t mean it’s making the industry more competitive. Yet, by selling off it’s assets (spectrum & infrastructure) to a viable player such as AT&T the industry becomes more competitive forcing others to step up. 

    In an industry with substantial fixed costs & infrastructure investment needs, achieving sufficient scale is critical. Scale benefits allow cost savings to be passed along to consumers. Even AT&T & VZ don’t pass savings through, the value to the consumer still increases through better service, more coverage, and enhanced features. In this case, TMO customers will LTE network, more AT&T subs will get LTE that otherwise wouldn’t. Service quality should improve for both as well.

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    Posted: 21 March 2011 07:12 PM #26

    Update!  I was wrong - AT&T announced that T-Mo 3G handset owners would have to switch out because the 1700 MHz frequency’s being abandoned.

    AT&T of course will have a replacement program.  So if the merger goes through, I wonder what a lot of T-Mo subscribers will go for? wink  Sounds good as far as AAPL is concerned!

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  • Posted: 22 March 2011 01:53 AM #27

    turleymuller - 21 March 2011 04:52 PM

    In an industry with substantial fixed costs & infrastructure investment needs, achieving sufficient scale is critical. Scale benefits allow cost savings to be passed along to consumers. Even AT&T & VZ don’t pass savings through, the value to the consumer still increases through better service, more coverage, and enhanced features. In this case, TMO customers will LTE network, more AT&T subs will get LTE that otherwise wouldn’t. Service quality should improve for both as well.

    I like the above paragraph.  grin

    Ultimately, for AT&T the acquisition cost will prove to be inexpensive. For T-Mobile it’s the best price that might have been obtained due to similarities in infrastructure. The deal is a winner for both parties.

    For customers it will result in better quality services and the delivery of better services much more quickly than if AT&T had to build the infrastructure on its own.

         
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    Posted: 22 March 2011 10:50 AM #28

    1. If ATT guarantees with collateral that infrastructure will expand and improve in rural areas, then I would consider to enthusiastically endorse a T-mobile buyout.  Anything short of that would dampen my enthusiasm to the level of my swampland.  A promise from ATT isn’t worth much.

    2. Improved customer service ?  Clean up your website, ATT.

    3. Improved flexibility in phone plans or price reductions ?  insert wild horses or over my dead body phrases.

    Ultimately, I don’t object to ATT buying out T-mobile, but my benefit should be what I want and in hand and not want ATT is saying they will do.

         
  • Posted: 22 March 2011 01:01 PM #29

    Tetrachloride - 22 March 2011 01:50 PM

    1. If ATT guarantees with collateral that infrastructure will expand and improve in rural areas, then I would consider to enthusiastically endorse a T-mobile buyout.  Anything short of that would dampen my enthusiasm to the level of my swampland.  A promise from ATT isn’t worth much.

    2. Improved customer service ?  Clean up your website, ATT.

    3. Improved flexibility in phone plans or price reductions ?  insert wild horses or over my dead body phrases.

    Ultimately, I don’t object to ATT buying out T-mobile, but my benefit should be what I want and in hand and not want ATT is saying they will do.

    The costs of adding infrastructure and improving services absent this acquisition can also be counted in the tens of billions over time. In the long run the acquisition cost is low relative to what’s obtained (34 million wireless customers, compatible infrastructure, additional spectrum, etc.).

    There’s a reason DT is exiting the US market and it’s quite possible the US may not be able to economically support more than two national wireless services providers with the resources to invest in new technologies and enhanced services.

         
  • Posted: 22 March 2011 01:23 PM #30

    DawnTreader - 22 March 2011 04:01 PM
    Tetrachloride - 22 March 2011 01:50 PM

    1. If ATT guarantees with collateral that infrastructure will expand and improve in rural areas, then I would consider to enthusiastically endorse a T-mobile buyout.  Anything short of that would dampen my enthusiasm to the level of my swampland.  A promise from ATT isn’t worth much.

    2. Improved customer service ?  Clean up your website, ATT.

    3. Improved flexibility in phone plans or price reductions ?  insert wild horses or over my dead body phrases.

    Ultimately, I don’t object to ATT buying out T-mobile, but my benefit should be what I want and in hand and not want ATT is saying they will do.

    The costs of adding infrastructure and improving services absent this acquisition can also be counted in the tens of billions over time. In the long run the acquisition cost is low relative to what’s obtained (34 million wireless customers, compatible infrastructure, additional spectrum, etc.).

    There’s a reason DT is exiting the US market and it’s quite possible the US may not be able to economically support more than two national wireless services providers with the resources to invest in new technologies and enhanced services.


    Ironic that anyone would want the government to scrutinize the acquisition of DT when it was the governments choice to determine that it owned the airwaves and could parcel them out to the highest bidders.  This act alone made a lack of competition all but inevitable.  Talk about billion dollar barriers to entry.  :bugeyed:

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