Blocked AT&T, T-Mobile Deal May Be Bad For Smaller Rivals

The failure of AT&T’s planned acquisition of T-Mobile may ultimately spell a bleaker future for smaller wireless carriers in the U.S., analyst have reportedly suggested.

According to Reuters, the comments come from analyst of the firms William Blair and Moody’s.

William Blair analyst Jim Breen suggests that T-Mobile will “emerge as a stronger, more formidable competitor once the uncertainty of the merger has elapsed and its network quality is enhanced via the acquisition of the AT&T spectrum assets.”

This will ultimately hurt smaller carriers like Sprint, MetroPCS and Leap wireless, Reuters says.

If the AT&T proposal to acquire T-Mobile falls through, AT&T will have to pay T-Mobile about $6 billion as a breakup fee.

The failure of the AT&T T-Mobile merger may mean a harsher future for smaller rivals. Image: Glyn Lowe Photos / Flickr (CC)

This includes $3 billion in cash, and other assets including wireless spectrum amounting to about the same value.

Meanwhile, Reuters writes that Moody’s said in a research note that the failure of the deal could also lead to a network sharing deal between AT&T and T-Mobile which would hurt Sprint (which ironically has filed a lawsuit against the AT&T T-Mobile merger).

The news comes after the U.S. Federal Communications Commission Chairman Julius Genachowski has circulated a draft resolution to send the AT&T T-Mobile proposed deal for review of an administrative law judge, signaling the agency’s opposition to the deal.

The U.S. Department of Justice has also filed a suit to block the merger.

AT&T has already set aside $4 billion to prepare for a breakup fee to be paid to T-Mobile should the deal not be approved.

Via Reuters

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Solon Harmony Dolor

A passion for technology and journalism makes this upcoming writer very interested in social media and technology news. Fresh from finishing an English and Journalism degree from the University of the Philippines Diliman, he aims to bring interesting news to our readers .

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