AT&T to Merge with T-Mobile

March 21, 2011 — by Per Christensson

Yesterday, AT&T announced a planned merger with T-Mobile. The deal involves AT&T buying T-Mobile USA for $39 billion from Deutsche Telekom, the German parent company. This means the second and third largest cellular service providers in the U.S. are becoming one company. AT&T will move from number two to number one in market share, Verizon will fall to the number two spot, and Sprint will be left as a distant third.

The news of this major merger leaves me with a few questions. First of all, is this really happening? We already have too few cellular service providers. Secondly, who decided $39 billion would be a fair price? Maybe T-Mobile requested $40 billion, but AT&T offered $38 billion, so they compromised at $39 billion. I guess a billion here or there is not a big deal. Thirdly, if AT&T has $39 billion laying around, then why haven't they been improving their cellular service? I'm currently an AT&T customer and about 15% of my calls get dropped. You'd think some of that money could have been used to install new towers and improve reliability.

I guess we just have to wait and see how the AT&T-Mobile conglomeration will pan out. Maybe by combining all the AT&T and T-Mobile towers into a single infrastructure, call reliability will improve. I'd like to be optimistic, but from my experience, less competition usually doesn't lead to better results. Remember my situation with Comcast? Whatever happens, it looks like Apple wins again since they just got a new iPhone partner without even trying.