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Future Uncertain For T-Mobile After Failed AT&T Merger, says Analyst

by Brandon Russell | December 19, 2011December 19, 2011 4:15 pm PDT

T-Mobile StoreAT&T finally made it official. After spats with the FCC and Department of Justice, AT&T said on Monday it was withdrawing its proposed $39 billion bid to acquire T-Mobile. It’s been well documented that, despite Ma Bell’s best efforts, the merger was fiercely opposed and called into question because of antitrust concerns. In the end, AT&T finally threw in the towel.

The nation’s second largest wireless carrier condemned the actions of the FCC and DoJ, claiming the current wireless industry landscape was suffering in the U.S. due to a spectrum shortage. Naturally, AT&T argued the merger would have alleviated this problem, but nothing doing according to the merger’s opponents.

While it’s a blow to AT&T after months of failed attempts, it’s an even more devastating outcome for T-Mobile’s fortunes. Magenta has taken a huge hit on market share in 2011, perpetually ranking as the fourth carrier behind Verizon Wireless, AT&T and Sprint. Even worse, it’s the only top carrier on the market without the incredibly popular iPhone, making it more difficult to compete against the big boys.

Speaking on the matter, independent industry analyst Tero Kuittinen said, “Now that the merger has failed, it’s unlikely T-Mobile could court Verizon or Sprint as potential suitors because they use completely different cellphone technologies to service their phones. T-Mobile is probably going to be profoundly damaged by this. They should have done some strategic rethinking instead of chasing this mirage, this dream of a merger. Now they’ve lost a lot of time.”

So what should T-Mobile do moving forward? Explore “creative opportunities,” said Kuittinen. “T-Mobile’s spectrum, not its customer base, is its most valuable asset.” By that Kuittinen means seeking partnerships with companies like Amazon, Facebook or even Google. Whether or not Magenta will explore these options only time will tell. If the company can find a way to offer up a tantalizing exclusive it would certainly turn some heads. However, if the carrier doesn’t find a solution to its diminishing market share soon, who knows where it will be in a few years time.

What do you think T-Mobile should do next?


Brandon Russell

Brandon Russell enjoys writing about technology and entertainment. When he's not watching Back to the Future, you can find him on a hike or watching...