T-Mobile's future: Zombie carrier

T-Mobile's future: Zombie carrier

Summary: The most likely scenario for T-Mobile is that it becomes a zombie carrier. It lacks the heft to compete with its largest rivals.

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TOPICS: Mobility, Wi-Fi
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AT&T won't buy T-Mobile after all as the $39 billion deal was scuttled over regulatory concerns. Now the real sport begins: Watching T-Mobile's fate unfold.

The scenarios go like this:

  • T-Mobile will continue to be a fourth rate carrier that lacks Apple's iPhone. The faux 4G pitch will eventually wear thin for T-Mobile.
  • T-Mobile will wither away over time without AT&T. It's possible that T-Mobile becomes a zombie carrier that can't be overly aggressive because it lacks the spectrum on its network.
  • Financial engineering---joint ventures, a T-Mobile IPO and other changes---will be attempted so Deutsche Telekom can get it U.S. carrier off its books.
  • Consumers are likely to see T-Mobile suffer from a lack of investment going forward.

In other words, the Federal Communications Commission and Department of Justice wanted a No. 4 wireless carrier in markets so bad that it was ready to risk potentially killing one to make a point.

More: AT&T statement, Techmeme, AT&T punts on T-Mobile purchase | CNET coverage: How about AT&T and Dish? | Sprint: AT&T made the 'right decision' | What's plan B for T-Mobile?

Oppenheimer analyst Tim Horan said in a research note:

From an industry perspective, post deal-breakup this makes T-Mobile the biggest wildcard in the industry. In our view, Deutsche Telekom has the option of possibly spinning off T-Mobile USA, or it could work to create a joint venture/co-build arrangement with AT&T. We do not envision Deutsche Telekom continuing to make significant investments in T-Mobile USA, though.

Other analysts are more optimistic about T-Mobile, which does get wireless spectrum in 128 U.S. markets. William Blair analyst Jim Breen said:

We believe that T?Mobile will emerge refocused, without the overhang of a pending merger, and with improved network quality via the acquisition of the AT&T spectrum assets. T?Mobile has been aggressively asserting itself in both the postpaid and prepaid wireless segments and will likely continue its competitive push with additional spectrum.

Breen's view seems wildly optimistic to me, but T-Mobile could become a prepaid juggernaut. In any case, T-Mobile is the weak sister on the wireless block.

The most likely scenario for T-Mobile is that it becomes a zombie carrier. It won't be attractive for a buyout, can be spun off as stock market junk and lacks the assets to compete with Verizon, AT&T and even Sprint.

The following chart illustrates how T-Mobile is already a zombie carrier. The T-Mobile customer base is eroding and the quarters outlined below don't include the Apple iPhone 4S launch at every carrier not called T-Mobile.

Add it up and the T-Mobile metrics don't scream healthy wireless carrier. You can expect those subscriber trends to continue. T-Mobile is headed to zombie-ville.

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Topics: Mobility, Wi-Fi

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65 comments
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  • RE: T-Mobile's future: Zombie carrier

    I see nothing gained by T-Mobile subscribers being gobbled up by AT&T. Higher rates, crappier service, more and more complaints - in other words:<br><br>Paying more = Getting less<br><br>No, it's best to let the natural order of selection take place and let it eventually die if that's what's to happen. That's how Darwinian tea bag capitalism works. The fittest survive.
    ScorpioBlue
    • RE: T-Mobile's future: Zombie carrier

      @ScorpioBlue, I agree wholeheartedly I am a t-mobile customer and I was sickened at the thought of being sucked under AT&T's money-grubbing hands. It would have been horrible for the customers either way it went so I'd much rather the company end this way instead of AT&T benefiting from it. I also heard a rumor that Dish network was considering tmobile, they've been looking to get into the phone space. So I don't know, maybe there are some other potential buyers that will pop up, but at least I don't have to worry about being an AT&T customer.
      BreeBerry
      • Agreed.....

        @BreeBerry

        Both Verizon and ATT are the worst. I originally had Bell-Atlantic which eventually became Verizon. They became so bad that I switch to Cingular. Their service was great until ATT took them over. Because of ATT incompetence in EVERYTHING they do, especially the customer service, I abandoned them too.

        I suspect that T-Mobile will survive as both ATT and Verizon lose customers due to their terrible service.
        linux for me
      • RE: T-Mobile's future: Zombie carrier

        @BreeBerry 10 years ago I vowed to never again buy anything from at&t over an $8 dispute. I own an t-mobile phone, and quite happy with it. I just hope that t-mobile won't go under. They are a very nice low cost provider, and there are lots of people in need of just a simple dumb mobile phone with no bells, wistles and strings attached.
        ForeverSPb
      • RE: T-Mobile's future: Zombie carrier

        @BreeBerry I agree also. My only concern now is that MetroPCS will become the target of AT&T overtures. I left Verizon 6 months ago for MetroPCS because I couldn't fathom locking into another 2-year contract and paying $110/month for a LIMITED (1400 minutes) voice plan with unlimited text and web on a Blackberry in favor of a month-to-month plan at MetroPCS for less than half of that ($45). I've been happy with the 4G LTE service offered by Metro and now I'm worried that, as a smaller carrier, AT&T might be licking their chops over MetroPCS now. I'm hoping that the decision makers at Metro don't forget why they have their customers in the first place.
        malcolm@...
      • RE: T-Mobile's future: Zombie carrier

        @BreeBerry 100% Agreed. The writer of this article is obviously not a T-Mobile customer and I will bet he is an iPhone owner as well. He is only seeing the world through Apple-Colored Glasses. There is LOTS of life outside of the iPhone and T-Mobile customers are the happiest in the industry. I am one of them. I have been a customer since they were Voicestream and have never looked back. T-Mobile will be just fine.
        j28n
      • RE: T-Mobile's future: Zombie carrier

        @BreeBerry I had T-Mobile a few years back. Loved it. Had unlimited data and 500 regular talk time with free nights, weekends and roaming. Total bill? $40.00 per month. Never had an issue with dropped calls either. Wish I could get an iPhone on their service.
        The Danger is Microsoft
      • It really is Peggy

        @malcolm
        The trouble with Metro PCS is that when you call customer service, you get some call center in the United States.
        Robert Hahn
    • RE: T-Mobile's future: Zombie carrier

      @ScorpioBlue T-mobile + sprint better. But there are probably issues getting that merger to work since t-mobile is already piggy backing on the AT&T network.
      Socratesfoot
      • RE: T-Mobile's future: Zombie carrier

        @Socratesfoot
        Question: Does a move to LTE do anything to alleviate potential Sprint/Nextel and T-Mobile compatibility issues? While their respective phones won't work on each others' ???3G technologies, can 4G make it work? If so, this marriage might be one made in heaven. Certainly, it'd make good sense from a spectrum standpoint.
        x I'm tc
      • RE: T-Mobile's future: Zombie carrier

        Socratesfoot, T-Mobile doesn't piggy back on AT&T's network. Otherwise AT&T would have the spectrum they were hoping to get from buying T-Mobile.
        ITechGeek
      • Negative ROI

        @Socratesfoot
        You forget Sprint/Verizon have different technology than TMo and AT&T.
        For a CDMA company to bring in and convert a GSM company is a serious negative ROI not counting time.
        Want an example? Go back and look what it took for Sprint to absorb Nextel.
        That was a painful process.
        rhonin
      • RE: T-Mobile's future: Zombie carrier

        @Socratesfoot

        T-Mobile only piggy backs on AT&T slightly more than AT&T piggy backs on T-mobile. T-mobile actually has more spectrum per subscriber than AT&T, and their 3G actually operates on completely different spectrum, so unless you have a pentaband phone like the Galaxy Nexus, you can't get a device that will do 3G on both companies' towers.
        tkejlboom
      • RE: T-Mobile's future: Zombie carrier

        @Socratesfoot

        Nextel/Sprint wasn't an engineering problem. It was a business problem. Suits were fighting over whose division was kept. It's the same with virtually every merger between competing companies. AT&T is going LTE instead of continuing to invest in HSDPA+. LTE, you may recall is the way Sprint and Verizon are going. Meanwhile, guess what the GSM Galaxy Nexus supports? That's right, it runs BOTH HSPA and LTE. USER CHOICE!
        tkejlboom
    • RE: T-Mobile's future: Zombie carrier

      @ScorpioBlue
      I agree!!
      giwoongyun
    • stunning numbers.........

      @ScorpioBlue <br>it seems like growth is flat, not like the company is going out of business. since att was going to buy them, maybe people were leaving or letting their contracts expire, since they knew rates would increase. Just because a company doesn't have iphone really doesn't cut it as a reason to go out of business. If you're looking for a low cost carrier, why would you buy the most expensive phone on the market and jack up your bill. FUD, FUD FUD!!!
      sparkle farkle
      • RE: T-Mobile's future: Zombie carrier

        @sparkle farkle - mmm....I don't know about that. I would JUMP to T-Mobile if I could get an iPhone from them. The iPhone 4S is what is controlling my decision. So sad I have to stick with AT&T yet again (getting a family plan which will easy some of the pain).
        The Danger is Microsoft
    • Unreal. So it's better to have T-mobile go out of business, than to have

      it owned by AT&T. Just because you don't like AT&T. Brilliant.
      baggins_z
      • RE: T-Mobile's future: Zombie carrier

        @baggins_z - some would say yes. better to pay 10% for T-Mobiles assets than 100%.
        The Danger is Microsoft
    • it's not about competition, it's about constraint....

      @ScorpioBlue
      there's two ways to look at this, either you have the carrier of your choice, or have the phone of your choice. Carrier lock-in is the real problem here, and congress has little understanding or desire to remedy the problem. If you were free to buy the phone of your choice and use it on whatever network existed, then it would go a long way to encouraging comptition between the networks. there are both 3 and 4 g models of the iphone available , so what's the problem?? It's that carriers are getting lock in by having incompatible networks, and it's about time we adopted the european model and encouraged competition. it's not 3g or 4g, compatible login capabilities (aka sim card) allows you to decide how you want to use your device, and who you want to pay for the priviledge. of course, it might lead to reduced rates.........
      sparkle farkle