The AT&T - T-Mobile merger may be off the table
, but T-Mobile's parent company Deutsche Telekom is walking away from the deal with a smile on its face. The communications giant released the details of what AT&T agreed to pay for the privilege of bidding on its business, and it's an impressive set of benefits.
AT&T's $3B (approximately €2.29B) payment will reportedly be used to pay down DT's debts in other areas. What T-Mobile is getting is a large package of AWS spectrum in 128 market areas, including 12 of the top 20 ((Los Angeles, Dallas, Houston, Atlanta, Washington, Boston, San Francisco, Phoenix, San Diego, Denver, Baltimore and Seattle). As a result, DT's population coverage will increase by 21 percent, from 230 to 280M potential customers.
No word yet on whether Carly gets a raise
The two companies have also signed a roaming agreement over UMTS which DT states "As a result of the agreement with AT&T, coverage will be extended to many regions of the U.S. in which T-Mobile USA previously had neither its own high-speed mobile communications network nor the associated roaming agreements."
Merger was a bad idea, FOO!
Deutsche Telekom gives lip service to its support for the merger, claiming that "important arguments in support of the transaction have been ignored, such as the significant improvement in high-speed mobile network coverage for the U.S. market, as well as the positive employment effects," but the FCC report was both thorough and damning in its criticism of the proposed merger. While the German telecom still intends to unload T-Mobile, these agreements have substantially strengthened the network's competitive position.
The irony of the situation is that many of AT&T's arguments in favor for the merger claimed that T-Mobile wasn't actually meaningful competition and that the company wouldn't be able to maintain market share in the face of LTE rollouts from the likes of Sprint and Verizon. The success of the iPhone 4S, however, is evidence that 4G support isn't a must-have feature for consumers—at least not yet. We suspect 4G adoption will lag until battery life can be brought into line with current 3G modems. At present, activating 4G drains significantly more battery power than 3G with a correspondingly negative effect on battery life.
Between the two companies, it was AT&T, not T-Mobile, that went before Congress claiming it would refuse to build out coverage if the T-Mobile deal fell through. Regardless of whether or not the American company follows this ridiculous strategy, T-Mobile is free to invest in its own network without seeming hypocritical. Deutsche Telekom hasn't stated if its in negotiation with Verizon or Sprint, but we doubt T-Mobile will be up for acquisition again in the next few months. After investing much of a year working on the AT&T - T-Mobile deal, the FCC probably wouldn't be thrilled to be re-examining the question so soon.