AT&T Acquires T-Mobile USA

Businesswire press release:

DALLAS & BONN, Germany–(BUSINESS WIRE)–AT&T Inc. (NYSE: T) and Deutsche Telekom AG (FWB: DTE) today announced that they have entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at approximately $39 billion. The agreement has been approved by the Boards of Directors of both companies.

This move will make AT&T the largest US telecom by a substantial margin and could have interesting repercussions for devices around the world.

T-Mobile USA is a relatively new company and as a result, their 3G network is on the new 3G-AWS band. This band offers speeds similar to standard 3G, but requires a 3G-AWS chipset in the mobile device in order to work at those speeds. Essentially, this means that all the popular 3G devices (iPhones, most android phones etc) won’t work well on T-Mobile’s network. Many new telecoms around the world, including Wind and Mobilicity in Canada, also operate a 3G-AWS network and thus have a very limited selection of phones to offer their customers.

Hardware manufacturers are not willing to make AWS-compatible versions of all of their devices, so the new telecoms are generally left out. As some consumers make the handset their primary focus when choosing a phone plan, this eliminates a lot of customers for the new telecom companies.

This merger will mean that AT&T will absorb T-Mobile’s 34 million subscribers and 3G-AWS network. Adding this to AT&T’s 96 million subscribers turns AT&T into a company with 130 million subscribers and a 3G-AWS capable network.

This could mean one of two things:

1. Any hope for AWS-capable premium handsets (iPhone) is essentially dead.
2. AWS-capable premium handsets just became a lot more viable.

Which way it goes depends entirely on AT&T’s strategy going forward. On the one hand, manufacturers could see it as the death of a 34 million subscriber AWS company and see little need at all any more to produce AWS versions of phones. This would make the fight to get good devices just that much harder for Wind and Mobilicity.

On the other hand, AT&T could be fully integrating the AWS network into their own, in order to help boost their network in weak spots. They may encourage the use of the AWS network and this would entice hardware manufacturers to make an AWS version of all of their phones.

It is an interesting question I would like to see answered.