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Topic: AT&T

T-Mobile: Is there a plan B without an AT&T sale?

Summary: Just a few weeks ago, the plan for T-Mobile was clear: Sell to AT&T. Now the wireless carrier is in a state of limbo and needs a plan B pronto.

Larry Dignan

By for Between the Lines |

When Deutsche Telekom reports its third quarter results on Thursday the biggest question will revolve around T-Mobile's future.

Just a few weeks ago, the plan for T-Mobile was clear: Sell to AT&T. But U.S. regulators scuttled that deal on competitive worries. If appeals by AT&T and T-Mobile fail, Deutsche Telekom will get a $3 billion breakup fee and some spectrum. Despite those consolation prizes, Deutsche Telekom will still lack an exit strategy for T-Mobile, which now looks worse because AT&T, Verizon and Sprint all have the iPhone.

In other words, T-Mobile is looking at a lot of churn in future quarters.

So what is plan B? T-Mobile, Deutsche Telekom and AT&T are in a legal battle with the Department of Justice and really can't say. Of course that hasn't stopped others from speculating about what a plan B looks like for T-Mobile if the AT&T deal falls apart.

Bernstein analysts Robin Bienenstock and Craig Moffett portrayed T-Mobile as a sitting duck in a recent research note:

In anticipation of the deal's potential failure in the wake of the DOJ letter, T-Mobile has significantly increased its advertising. And it has introduced a potentially disruptive pre-paid pricing plan that is the industry's first to openly embrace "bandwidth arbitrage." But they can't do anything disruptive in post-paid – still their core business – for fear of bolstering the DOJ's case that they play an important role as a disruptor.

From a positioning point of view, T-Mo USA is more stuck in the middle than ever and bleeding higher ARPU customers to the top (AT&T and Verizon) and value seekers to everyone else. Device manufacturers and backhaul providers appear reluctant to do deals with a company that may or may not exist as an independent entity in just a few months.

Simply put, T-Mobile is facing a debilitating state of limbo. And if appeals drag on, T-Mobile may have to wait months to a year to try and revive operations.

According to Bienenstock and Moffett, T-Mobile's options have dwindled. It can't merge with Sprint because U.S. regulators seem hell-bent to have four large wireless carriers. One option for T-Mobile may be a merger with a cable operator. Comcast and Time Warner Cable could provide spectrum to the constrained T-Mobile. Comcast and Time Warner Cable hold the same spectrum as T-Mobile. T-Mobile gets a savior and cable gets an answer to 4G.

If this cable-T-Mobile marriage actually happened Deutsche Telekom could exit via an initial public offering of the wireless combination.

Jefferies analyst Ulrich Rathe argued that T-Mobile's Plan A---a deal with AT&T still could work. How? AT&T and T-Mobile would sell off enough assets to create a new national operator. The DOJ and AT&T are likely to negotiate right up until a Feb. 2012 trial.

In the meantime, T-Mobile sits. A plan that doesn't include AT&T would sure alleviate a lot of concerns from customers.

Related:

Topics: AT&T, Mobility, Wi-Fi

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22 comments
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  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    The arrogance on the part of AT&T and T-Mobile was breathtaking thinking this deal would go through unopposed. I have been a T-Mobile customer for six years but am loathe to make any changes to my service as T-Mobile has gone from being a great company to deal with to being an AT&T/VZW imitator. In fact, T-Mobile's recent decision to put pay-per-use data service on all customer accounts was nothing but a money grab at people who might accidentally access data and thus get charged. Right now I am currently deciding whether or not to terminate my account after all these years. My employer bought me an iPhone 4S on Sprint as an early Christmas present. I am now carrying two phones (the iPhone and a Motorola V360 on T-Mobile). Considering I am paying T-Mobile around $38/month on a grandfathered plan for 500 anytime minutes and no text or data, dropping the account is making more and more sense especially since I am allowed to use the iPhone for personal use.
    Zzznorch
    Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    "Despite those consolation prizes, Deutsche Telekom will still lack an exit strategy for T-Mobile, which now looks worse because AT&T, Verizon and Sprint all have the iPhone."

    The only reason that they do not have the iPhone is that Apple crippled the iPhone 4S by not activating the 1700Mhz frequency that is needed to access T-Mobile 3G/4G. I wonder how much money AT&T paid Apple under the table to not support the frequency (which IS supported by the Qualcomm chip in the iPhone 4S since there are other handsets that DO support it using the same chip).
    RARPSL
    Reply Vote

    • RE: T-Mobile: Is there a plan B without an AT&T sale?

      @RARPSL

      Can you mentions some other phones that use the same chipset. iPhone 4S uses Qualcomm MDM6610 and for RF Qualcomm RTR8605. Quoting

      http://www.thecuttingedgenews.com/index.php?article=52950&pageid=28&pagename=Sci-Tech

      "In contrast to the iPhone 4 models, the MDM6610 is discrete and is no longer integrated with the radio frequency transceiver, IHS said. The RF transceiver is the Qualcomm RTR8605, a dual-mode device previously observed by the IHS iSuppli Teardown Analysis Service in other handset designs, such as the Hewlett-Packard Veer and HTC Thunderbolt"

      Although I don't think those two handsets have AWS.
      Win8AnUglyDisaster
      Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    Plan B Apple should buy T mobile and convert it a VPN for exclusive use by iphone users. Or Google should by T mobile and make it open and netural,
    nboke
    Reply Vote

  • Microsoft to Buy

    MS will probably snap them up.
    x I'm tc
    Reply Vote

    • RE: T-Mobile: Is there a plan B without an AT&T sale?

      @jdakula And why would they do that? What's the basis of your speculation? MS getting into an entirely new business is not something they have ever done. Plus it would hurt their relationship with Nokia which much more important.
      Jim__J
      Reply Vote

      • RE: T-Mobile: Is there a plan B without an AT&T sale?

        @Jim__J Why would it hurt relationships with Nokia? T-Mobile has been the most Nokia-friendly carrier.
        jgm@...
        Reply Vote

    • RE: T-Mobile: Is there a plan B without an AT&T sale?

      @jdakula God, I hope not....
      balsover
      Reply Vote

    • RE: T-Mobile: Is there a plan B without an AT&T sale?

      @jdakula they would be renamed to XMobile? (in reference to XBox)
      TheFilipinoFlash
      Reply Vote

  • I see two possibilities

    1.) T-Mobile USA becomes its own company, independent of its German overlords. It then needs to go for broke in being the "Anti-AT&T". ZZZnorch said it best in that silently adding the pay-per-use charge on all the different accounts was clearly an AT&T-esque move. If they're an independent company, then they need to own the market for value. I don't mean value as in cheap rates per say, I mean it in the sense of doing things that no other carriers do: have a plan where phones can be subsidized without a data plan (even if it isn't as much). Keep being the only company to not charge data overages. Say to AT&T customers: "If you're willing to deal with EDGE (and pay half the price in the process), we'll help you unlock your iPhone for free". While smartphones are all the rage these days, have Nokia make a few interesting feature phones and add them to the lineup. There's a metric ton of stuff that they can do that will generate customer loyalty, and the single biggest selling point they can have is "we're not AT&T".

    2.) nboke said it best - become Google Mobile.

    Joey
    voyager529
    Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    As a long-time T-Mobile user, I'd much rather see a buy by Google or Amazon than by AT&T or Apple....
    egads@...
    Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    Thy simply need to differentiate themselves. Let people buy the phones they want, from where they want, and then allow them to stick a SIM card, any SIM card, in the phone and use it. AT&T, Verizon, and Sprint have collaborated enough to hold the Wireless Market hostage and disallow innovation. T-Mobile should innovate !
    jkohut
    Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    This should be the move for Google to step in and really revamp the wireless industry. They have their own OS and now their own device Manufacturing unit (Motorola) why not just swoop in and buy your own service provider.
    kgne36
    Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    I've been with T-Mobile for years and overall they've been good. Customer service is prompt and courteous and they offer great phones. Hopefully they'll get this mess resolved. I use AT&T for wireless Internet and can't really complain about them either. A merger wouldn't have bothered me in the least.
    neverhome
    Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    Sprint has no use for TM except for parts (spectrum). If T doesn't buy them, the only possibilities would be a cableco for a quad-play play or Google (possibly in alliance with a cableco). Apple's too smart to buy them.

    If T does buy them I could see enough divestments required to make this barely worthwhile for T.

    Could some other party buy their way in, like a MVNO like Virgin (probably too tied to CDMA/Sprint) or (much more likely) TracFone?
    jabster17
    Reply Vote

  • Jeez, you make it sound so final just because they don't have the iPhone

    Who cares? Sprint has the iPhone and it is trash on their network, it might as well be an iPhone 3 for the bandwidth my coworker sees. The other vendors did fine without it before so T-Mobile will be fine without it now. If T-Mobile has issues it will not be because they do not sell the iPhone.

    If there is no iPhone they can always builld the ultimate Android phone, more people purchase those anyway.
    balsover
    Reply Vote

  • I thought they were on the right track

    Android is larger and growing faster than the iPhone. I don't think they need the iPhone to compete. They are fast and flexible, first with the last two Nexus phones, and they get in the way of Android updates the least.

    What they need to do is clarify their options. They have a plan where you can go no contract and buy your own phone. Over 2 years, if you can afford your phone up front, it's a much better value. The problem. No one seems to even realize it exists. They need to simplify, clarify, and market their PLANS rather than a handful of the devices they offer. Cell SERVICE PROVIDERS should be based upon the SERVICE they PROVIDE rather than the devices they sell.
    tkejlboom
    Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    DT was very clear that they had other options if the merger was scotched . Four other companies bid for TMO or as was mentioned TMO USA would sold off to shareholders .

    They do have other options . Obviously they must have thought it out some . This merger is a clear violation of anti-trust . They only people who I've read who support this merger are either getting something from AT&T or want to see net neutrality eliminated .
    The_Josh
    Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    [i]One option for T-Mobile may be a merger with a cable operator. Comcast and Time Warner Cable could provide spectrum to the constrained T-Mobile.[/i]

    Ho-boy, as a customer I'd run away from that. That's sounds about as bad as the AT&T deal.

    Either one would be a price gouge for it's customers
    ScorpioBlue
    Reply Vote

  • RE: T-Mobile: Is there a plan B without an AT&T sale?

    Whatever happens, you can bank on it being more expensive for the consumers with no particular improvement, just like the Comcast monopoly in many regions.
    lodaver
    Reply Vote
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