AT&T to Buy T-Mobile USA for $39 Billion rev124Bn/prof20Bn

AT&T 2010 Operating revenues $124Bn Net Income $ 20Bn 16%

T-Mobile 2010 Q4 rev 4.69Bn profit Net .268Bn 5.7%

AT&T to Buy T-Mobile USA for $39 Billion

5:08 p.m. | Updated 
AT&T announced on Sunday that it had agreed to buy T-Mobile USA from Deutsche Telekom for $39 billion — a deal that would create the largest cellular carrier in the country.
The merger — one of the largest since the onset of the financial crisis — would combine the second and fourth largest cellular carriers in the nation, bringing together AT&T’s 95.5 million wireless subscribers with T-Mobile’s 33.7 million customers.
The transaction, which requires approval from regulators, is expected to be heavily scrutinized in Washington. The deal would leave only three major cellular carriers in the nation: AT&T, Verizon and a much smaller Sprint, which may now be forced to find a merger partner.
Already, some critics say the deal could result in higher prices for consumers. T-Mobile had offered some of the lowest rates in the country. While AT&T is expected to honor current T-Mobile contracts, it is likely that once those expire, T-Mobile customers may have to pay AT&T’s higher rates.
Still, according to the U.S. Government Accountability Office, cellular subscription costs fell 50 percent between 1999 and 2009, a period in which the industry has consolidated.
“Don’t believe the hype,” said S. Derek Turner, research director of Free Press Research, a Washington think tank. “There is nothing about having less competition that will benefit wireless consumers. And if regulators approve this deal, they will further cement duopoly control over the wireless market by AT&T and Verizon.”
From the companies perspective, a deal is a big cost saver. The combined company is expected save more than $40 billion – roughly the price of the deal – over the next three years by shuttering retail outlets in areas where they overlap, reducing the need to build new cellular sites as well as eliminating overlapping back office, technical and call center staff.
Marketing costs, too, could drop. Cellular carriers have been one of the biggest advertising spenders in the nation.
Of course, it all depends on whether the deal gets the O.K. from regulators. Deutsche Telecom was so worried that the deal will not be approved that it pushed AT&T to pay a big breakup fee as a form of insurance, according to people involved in the deal. AT&T agreed to pay Deutsche Telecom a massive $3 billion breakup fee, as well as offer the company spectrum if the deal is blocked by regulators.
In hopes of winning over lawmakers, AT&T has agreed to deploy its fourth generation wireless broadband coverage to 95 percent of the country, including rural and small communities.
The Justice Department is expected to weigh in on the deal, examining the combined company’s share on a market-by-market basis. In some cities, T-Mobile is not among the four largest players, potentially helping AT&T’s case for approval. For example, in Miami, San Francisco and Detroit, Metro PCS has more customers than T-Mobile.
In an interview, AT&T’s chairman and chief executive, Randall Stephenson, said he expects the industry “will continue to be a fiercely competitive market” pointing out that “prices continue to move down.” He also said that in many markets, “on the local level you have a choice of five or more providers. When you get to the facts this a deal that gets approved.”
Under the terms of the deal, AT&T will pay $25 billion in cash and the rest in stock. Deutsche Telekom will in turn gain an 8 percent stake in AT&T and a seat on the telecom giant’s board.
AT&T’s bid will finally solve the problem facing T-Mobile USA, the smallest of the country’s four major cellphone service providers. Both companies operate on the same wireless standard, GSM. Through the deal, T-Mobile will finally gain a path for the next generation of cellphone data, known as 4G, by using AT&T’s forthcoming LTE standard.
Deutsche Telekom had been considering its options for T-Mobile for over a year. It had considered an initial public offering for the company, but shelved it. More recently, it had held talks about selling the unit to Sprint.
The talks with AT&T– which started in earnest back in December of 2010 — heated up in recent weeks amid renewed speculation about a Sprint-T-Mobile tie-up, according to people involved in the talks.
To keep the deal from leaking, the AT&T team had devised a complicated list of code names, known as “Project Auto” to throw people off the scent. AT&T was called “Tesla”; Deutsche Telecom was “Daimler” and T-Mobile was “Mercury.” When asked why T-Mobile was named after “Mercury” – not exactly known as for high-performance vehicles – Mr. Stephenson of AT&T chuckled: “We needed an ‘M.’ Nothing more.”
An army of investment bankers, which are expected to make hundreds of millions of dollars worked on the deal. AT&T was advised by Greenhill & Company, JPMorgan Chase and Evercore Partners, as well as the law firms Sullivan & Cromwell, Arnold & Porter, and Crowell & Moring. Deutsche Telekom was advised mainly by Morgan Stanley. Deutsche Bank and Credit Suisse also acted as financial advisors for Deutsche Telekom. It, too, has hired a bevy of lawyers: Wachtell, Lipton, Rosen & Katz, Cleary Gottlieb and Wiley Rein to handle regulatory issues in Washington.

NEW YORK | Thu Jan 27, 2011 1:57pm EST

(Reuters) - With only days remaining until it loses its grip over U.S. iPhone sales, AT&T Inc warned of a "rocky" start to 2011.

AT&T's shares fell nearly 3 percent in response to a disappointing profit outlook for the year, further unnerving investors about its growth prospects once market leader Verizon Wireless launches an Apple Inc. iPhone next month.

Chief Executive Randall Stephenson, even while forecasting "healthy" customer growth, acknowledged that the new iPhone would make life tougher, at least initially.

"It may be rocky in the beginning of the year, kind of volatile, hard to predict, but we think as we work through it and the market stabilizes, we'll be able to grow through it," Stephenson said during the company's quarterly conference call in which he seldom takes part.

The company, heavily dependent on iPhone, forecast 2011 earnings per share growth in the mid-single-digit percentage range. Analysts expected growth of about 10 percent.

"I suspect they're coming to grips with the reality of the iPhone exclusivity wearing off," said Avian Securities analyst Gerard Hallaren. He described it as "a slow bleed" for AT&T.

Adding to negative sentiment, AT&T's net additions of 400,000 valuable contract customers in the fourth quarter compared poorly with almost 504,000, the average expectation from eight analysts contacted by Reuters.

AT&T's figure was also less than half the 872,000 new contract customers reported by Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc.

"These results coming on the heels of Verizon's, really demonstrate Verizon's leadership position in the (contract customer) segment," Mizuho analyst Michael Nelson said.

AT&T's wireless profit margin was thinner than expected, too. The margin remained at 37.6 percent, in line with the third quarter, counter to AT&T's promise for an improvement.

The prospect of a Verizon iPhone has set the tone for the telecoms industry this earnings season. Motorola Mobility, which makes phones including the Droid for Verizon, acknowledged on Wednesday that its sales would be hurt by the arrival of iPhone. Its shares dropped almost 12 percent on Thursday [ID:nN26205631]

But AT&T noted that it still managed to activate 4.1 million iPhones in the quarter on top of 5 million activations in the third quarter, despite widespread speculation about the Verizon Wireless iPhone's arrival.

"With all that hype going on, we sold over 9 million iPhones," Chief Financial Officer Rick Lindner told Reuters. "We've a very solid loyal customer base with the vast majority with long-standing family or business relations."

Piper Jaffray analyst Christopher Larsen also found some positive news in AT&T's addition of 442,000 customers using tablet computers, including Apple's iPad. AT&T also cited sales of tablets based on Google Inc's popular Android software.

"That's one of the things they're doing," Larsen said. "They're not just about iPhones. They're selling a lot of other devices."

新聞分析:AT&T砸390億美元併T-Mobile USA的理由

上網時間: 2011年03月24日

針對美國電信業者 AT&T 日前宣佈以390億美元收購德國電信(Deutsche Telekom)旗下的 T-Mobile USA 之訊息,市場研究機構 Ovum 首席分析師Steven Hartley發表分析報告指出,此交易是美國電信市場已經邁向成熟的徵兆,而且這筆交易對AT&T比對德國電信還有利。
Hartley表示,AT&T藉由此交易為即將到來的 4G 大戰先取得了頻譜和綜效,德國電信則得到短期的現金增援,但交易價格遠低於它進入美國市場所付出的成本,而且失去了它的全球業務。而另一家美國電信業者 Sprint 是這場交易中最大的輸家。
Sprint在2010年第四季時擁有美國整體市場16%的用戶數,而且在四家全國規模的電信業者中排名第三;該公司現在依舊排名第三,但是用戶數量只有Verizon Wireless的一半,本來正要從過去幾年宛如災難的情況中開始復甦,現在卻更進一步被領導業者拋在腦後。
AT&T得到的重要優勢是T-Mobile的頻譜,這使得AT&T能加速自己的 LTE 計畫,並同時利用T-Mobile最近相當積極部署的HSPA+ 新建設;此技術合作讓這項交易顯得更有吸引力,Hartley認為,這比人們經常謠傳但是不合邏輯的T-Mobile 與Sprint 聯姻好多了。
Hartley指出,由於此交易規模龐大,以及由於 Verizon Wireless 在2008年收購Alltel的結果所產生的資產交換(Asset Swap),美國主管機關是極不可能不干涉的。雖然如此,AT&T的新聞稿仍厚顏無恥地拍美國政府的馬屁:強調客戶利益、美國所有權、組織工會和弭平數位鴻溝。
即使在這之後,這些設備可能要比之前配合更多的頻譜頻段,才能享受匯接網路帶來的好處。而且這是所有與整合工作有關的常見挑戰之中最為重要的事。但是在歷經BellSouth、SBC 和Cingular的合併案之後,AT&T近來有相當的整合經驗可作為借鏡、幫助他達成任務。