May 13 AT 10:38 AM Alberto Vildosola 41 Comments

AT&T’s failure to acquire T-Mobile would cost the company $6 billion

If you think 20 bucks is a lot of money to lose during one of those poker nights with your buddies, how would you feel about $6 billion? That’s how much AT&T could lose if it fails to acquire T-Mobile.

This is because AT&T agreed to pay T-Mobile $3 billion in cash if the deal fell through, plus $2 billion worth of wireless spectrum and a roaming agreement priced at around $1 billion. To put things in perspective, AT&T is buying T-Mobile for $39 billion, meaning the company is risking 15.4% of that just to be able to buy Magenta. That would be like somebody risking $3000 just to have the opportunity to buy a $20,000 car. It’s crazy. Of course, we don’t have $6 billion under our couch, so what do we know.

If AT&T has decided to risk this much capital, they must feel extremely confident that they’ll be able to buy T-Mobile — which means they’ll most likely be able to. But this thing is not over until Washington says so, and you never know what’s going to happen when the government gets involved.

Those of you that are against this acquisition, do you want AT&T to fail even more now knowing how much money the company is risking? Or do you admire their confidence?

Source: Reuters

Alberto is a college student living somewhere between Miami, Sarasota and the World Wide Web. Although a former iPhone owner, Alberto is now a proud Android enthusiast. You can follow Alberto on Twitter and Google+ for his thoughts unworthy of an article.

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  • Josh

    I hope it falls through. because a LOT of people switched from AT&T, TO T-Mobile. I think it would be awesome (and quite funny) if AT&T has to pay T-Mobile when they lose!

    • http://Website Magren

      its T-Mobile USA!
      The article should make this clear, T-Mobile in Europe is not part of this.

    • clewski

      I’m not a big fan of att either but I don’t think everyone is considering the fact that t mobile would have been bought out anyway by someone in the end. The US side of the company is being sold because its not a big enough money maker for the german (i believe) owners. If att didn’t make an attempt sprint has already admitted that it would have and I’m sure verizon is in the same boat. Att is just being competitive in that aspect so I cant blame them for the move even if att is a monopolistic company historically. Everyone here is making it seem like att just barged its way in to buy out the competition when that’s actually not true. I hope for att sake that this merger actually improves there H+ network and helps them to finally establish a lte network. Though I am admittedly an att customer (still on my parents family plan with the atrix : (…finally got faster speeds for upload…) I would prefer to be with sprint for some free tethering (i still have a grandfathered unlimited data plan, just no legal tethering for free). Maybe the t mobile merger will finally help att turn over a new leaf…a guy can dream at least right?

    • Lou

      Well, guess what?????? AT&T isn’t gonna pay for this………….it’s CUSTOMERS WILL!!!!! I’m gonna start looking for another cell phone company!

  • http://Website SoundCloud

    At&t is not displaying confidence, it’s call arrogance and greed. This is a scary trend that is now taking over the corporate world where buying your competition is a lazier option than simply out-smarting then through means of innovation and R&D. I hope At&t fails big time because they are planning a monopoly in the mobile communication industry and that would simply cause us, the consumers, to lose tremendously in this acquisition battle.

    • http://Website Anonymous

      You are so right! AT&T will try to monopolize on anything they could possibly corrupt.

      Back in the day, AT&T was spit up somewhat bc they were too big. Now they are re-acquiring companies again, and growing again. So let’s hope the FCC denies this merger, even if it is based on that basis alone. Competition benefits consumers, and AT&T would have a hard time continuing their monopoly with less competition in the cellular arena.

      They will continue to nickel & dime their customers, as they do now, only… the services wont improve. They will most likely continue with their ridiculous 2GB data plans, not offering unlimited data plans, and charge more for it to cover the $39 billion they spent.

      The real surprise is, they will continue to see customers of theirs & of T-Mobile jump the sinking ship before they can recover very much of it. About 75-80% of T-Mobile will probably jump to Sprint or Verizon rather than stay with AT&T (aka The Death Star). As it is, a huge amount of current AT&T customers are waiting for their contracts to expire so they too can jump ship.

      If AT&T takes T-Mobile, we might as well be saving up our quarters for the old pay phones again, bc not too many will be able to afford cellular/wireless services anymore.

      • http://Website Anonymous

        Actually I meant,
        “AT&T would have no trouble continuing their monopoly with less competition in the cellular arena.”

        Also, lets refer back a few years ago where Echostar (Dish Network) tried to buyout DirecTv from Hughes (a GM company). The merger/buyout didn’t happen then either. Thank heavens there are government agencies including Anti-trust.

        Flat out: A merger/buyout, would cripple the American people in the cellular area, in a digital high speed age. Means bad news.

  • http://Website Cheeto

    I really dont want this to happen but with this much money involved it is. Washington is going to get paid off to ensure this deal goes through. Corrupt MU FUGGAS!

  • http://Website bobomb

    Um… this was all over the place like weeks ago. And let’s hope and pray the deal falls through.

    • AME

      Yeah, I’m not sure why this article was (RE)written and posted now. There was no new information in this article. I read it excitedly thinking it was going to reveal that the deal fell through.

  • http://Website Cherubino

    It’s the other way round, T-mobile asks for that much because they’re aware it will come under intense anti-competitive scrutiny and there’s a considerable chance it might fell through. T-mobile is letting AT&T go through all their books and risking losing customers while this is being played out, they need to be compensated in the case the deal fell through.

  • http://Website garet

    thats why I have not jumped ship yet if it fails then its a big bonus to T-mobile customers they would get extra bandwidth so hopefully that would mean better coverage if AT&T wins I will go to Verizon hopefully they have a good Dual Core by then or maybe Quad Core LOL ;)

    • http://Website snowbdr89

      Vzw is working on a quad core motorola targa, everyone is giving big red crap for the lack of dual core phones do people really expect big red to sit on their ass and do nothing!!! I for one hope att fails, consumers need options..

      • clewski

        Easy there tiger, I’m sure vzw’s quad core will be great don’t get your panties in a bunch…

  • http://Website Richard Yarrell

    At&t is a FARCE a company trying to take advantage of the smaller tmobile who truly doesn’t need at&t under any circumstances. Why should people have to be forced to be part of a carrier if they don’t want too. I hope At&t and this deal fall flat on it’s face they don’t care about tmobile or android so screw At&t…..

    • http://Website Dennis

      Wow. Nice to see a post of yours that doesn’t involve Evo trolling. Good job.

  • http://Website Mocha K

    I hope the deal doesn’t happen. I’m with T-Mobile and I love it. Good prices, Sexy phones, Costomer service is awesome. If the deal doesn’t go through, they should give out free Galaxy S IIs. Who’s with me?

  • http://Website Mark

    That’s not confidence! That’s arrogance. $6 billion is like chicken change to them. They could probably use $10 billion to wipe their asses and still be able to live large. Either way, I hope the whole thing blows up in their faces.

  • http://Website Tony

    So the two largest 3G GSM networks are going to merge and I still won’t have 3G coverage at my house from it, how pathetic.

  • Lisa

    I really hope this falls through for AT&T. T-mobile is a respectable company. A lot of my family has T-mobile and I have been impressed with their business practices. The coverage they get isn’t bad either.

    AT&T on the other hand is pretty shoddy service.

  • http://Website thunderdan

    I hope this fails. Competition is good for business and gives options. You want more customers,build a better product. Dont buy out your competition.

  • http://Website Ray

    II would not celebrate the failure just because there are jobs for people on the line. But I really think this is a merger that’s not good for consumers. I believe it would greatly benefit sprint and would support that… to protect my pricing plan

  • http://Website justin

    Yes, I want them to fail! Id love to wake up one morning to hear att isn’t acquiring tmob and they owe the 6 billion! Of course I think att will raise the bills no matter what! So they can get those 6 billion back.

  • tdh

    Part of me wants this to fail for the pure fact that I don’t want to have to replace my Nexus One. lol

    On the other hand I have friends who have AT&T and a number of issues, and have had issues with the bandwidth cap.

    I currently have no contract with T-Mobile and a fully unlocked Nexus One. I’ve only ever had to call them for support once, and I’ve never had a call drop on me. My only gripe about T-Mo is their data coverage isn’t that great where I am. So at work I have terrible EDGE, in town I have O.K. 3G speeds, and at home I only have 3G in my office – where I’m usually connected to Wi-fi anyway.

    I’m happy enough where I am, and would appreciate it if AT&T would not force me to be unhappy.

    • http://Website Anonymous

      I know what you’re saying! T-Mobile has always had 2G/Edge Data coverage here & now, they just got done putting in a 4G tower here. We went from 2G to 4G. And using 2G/Edge really sucks.

      T-Mobile is the only carrier to offer 4G in this city, and it is just south of a major suburb. AT&T would take years to get 4G here, and in many other locations around the country for that matter.

      • clewski

        Att wouldn’t be taking away your newly acquired “4g” (h+…), it would be using t mobiles existing towers in places where they haven’t reached with hspa+

  • http://Website Dru

    Just food for thought…but why is everybody so mad at AT&T? Last I checked T-Mobile had to agree to bought. Be mad at T-Mobile for not being able to generate the profits needed to stand on there own. This is capitalism people…if you company isn’t succeeding you either go out of business or sell it and try to make some money out of the deal. The object of business is to MAKE MONEY.

    • http://Website J.

      Because T-Mobile USA *didn’t* agree to get bought.
      Their parent company, Deutsche Telekom put them up for sale.

      And, yes, those of us who love T-Mobile are pissed as hell at them, too. Largely because they were the ones who scuttled the T-Mob/Sprint merger, which wold have done GREAT things for openness and competition. Not to mention given Richard Yarrell a heart attack.

  • http://Website btelks

    your analogy makes about no sense. this “car” i’m buying will devalue every year until its worth nothing. and buy t-mobile? it has the potential to earn billions of dollars if the deal goes thru. not exactly the same thing.

  • http://Website mmalakai10

    Honestly I hope the deal doesn’t go through. I see it like this, when I first was looking at purchasing a cell phone I went to all major carriers. I looked at there phone selection and plan pricing monthly. I also ask friends what carrier what they have how is the service overall. Most of my friends have T-Mobile, sprint and at&t. Only reason for at&t being there was becuz of the iPhone. Not recommending at&t becuz they hate there service. I got mix reviews on those 3 carriers. After my research I choose to be with T-Mobile. The ability to have that choice at the end of the day made me happy customer today with T-Mobile. Prices are good for my pocket, customer service has been so helpful with my issues. I feel like I’m being treated like the customer I should be treated with the service provided. I look at at&t and hear stuff like they are capping there 4g phones speeds. Them lying about it, also facing a problem trying to bring a 4g experience to there devices. I feel that’s to much already lying about what u have and what u can put on the table for ur customers. If I wanted at&t I would have chosen that service provider. They are full of company that has nothing but the iPhone to cater to. So keep ur iPhone I’m sticking with my google nexus that is offered by T-Mobile a by far in all way better company that delivers decent service. At&t the most drop call service provider in the market. Yeah rethink possibility get another service provider if u have at&t.

  • HackNet

    Confidence Monfidence!! I just want good voice and data service. They can buy and sell whatever they want. It’s not like i’m getting a cut out of it. :)

  • http://Website W Flores

    At&t say that this would promote competition. Where? How? There is no one else of their caliber who could compete at that level. $6 Billion termination fee? Sounds a bit like government extortion to me.

    None of this is in the best interest of the people. It’s in the best interest of At&t only. God willing someone with a clue at the FCC will hear that.

  • http://Website Anonymous

    A copy of the letter I sent to the FCC::

    To whom it may concern:

    I am writing to express my concerns on the matter of this merger/buyout.

    It appears that AT&T is trying to monopolize the cellular/wireless industry in the US.

    Competition benefits consumers, and AT&T would have no trouble continuing their monopoly with less competition in the cellular arena.

    The term “Nickel & dime” seems to apply here, as AT&T seems do now, only, the services don’t seem to improve any & doesn’t justify the higher expenses. They will most likely continue with their ridiculous 2GB data plans, not offering unlimited data plans, and charge more for it to cover the $39 billion that they plan to spend.

    Many of T-Mobile’s customers, myself included, will no doubt jump to Sprint or Verizon rather than stay with AT&T. And neither of those 2 companies are even as reasonable in pricing as T-Mobile is now.

    If AT&T takes T-Mobile, we might as well be saving up our quarters for the old pay phones again, because not too many of us will be able to afford cellular/wireless rates/services anymore.

    T-Mobile’s services costs on average for a single line account $70.-$80. per month with 5GB of unthrottled but unlimited data. Compare that, if you will, to AT&T’s services. AT&T charges on average for the same single line $115. with only 2GB of data, then you would have to buy more after that 2GB. That is a difference of $35. to $45. per month.

    Prepaid is not a solution, as they still cannot offer what a post-paid plan can. And budget carriers like Cricket has less service than any of the 4 leading national carriers, and they offer people 1GB of unlimited (untethered) data which is not nearly enough compared to T-Mobile, Sprint or Verizon.

    In a time of financial hardships, forcing people to have to pay more when they can barely afford what they have now is not a solution. AT&T has already acquired other companies over the past few years, and the Bell company that once had to downsize & split is rebuilding again, and it is not with the best interest of Americans at heart.

    If they want a better network, then they should build their own, not try to monopolize the cellular/wireless industry and leave competition alone. People cannot afford this merger/buyout, and if passed & allowed, we the people will lose. Not to mention, passing this merger/buyout most likely would have a negative impact on the American financial recovery efforts.

    That is why I ask that this merger/buyout be denied, so we may continue to enjoy competitive prices & our financial recovery may continue.

    Thank you for your time.


    • clewski

      How would the merger negatively impact the financial recovery of the united states economy?

      • http://Website Anonymous

        Well, if Americans have little competition in the utility department, like say, Cellular, and the prices go up, that takes away more money from consumers that could spend that money elsewhere isn’t it?

        That $30. more per month might go to help the fuel tank so we can drive to work or the store. Or perhaps it makes the difference between making a smaller purchase or not.


        PS: Thank you A&M for the correction to the error made in my previous posting. :-)

  • http://Website John K

    Fail… Please just fail.

  • http://Website Roflcopters

    I’m glad I went with Verizon and iPhone at the right time.

  • http://Website Devon Jones

    Half of tmobile’s customer base are people who went there to get away from AT&T, myself included. I don’t really care how much they stand to lose, that’s their own fault. if they succeed I lose and have to find another carrier. I will never go back to that awful company, their customer service is bad beyond redemption and they are openly hostile to open innovation.

  • http://Website mrfrontera

    I don’t want them to fail cuz my rents are paying the bill and if that goes up we may have problems.

    But at the same time I do so we can cancel our contract and join big red

  • http://Website Dannyjayfuller

    YES! FAIL! For the love of all that is good and holy, let us T-Mo customers continue enjoying our service. If this goes through, I’m going to Sprint. If not, then that’s a win-win for everybody but AT&T and their customers. Just spouting thoughts here, but with their draconian policies, iron-fisted enforcement and poor service and pricing, how does AT&T even have a userbase, let alone enough cash to buy out T-Mo?

  • Who isn’t?

    “Those of you that are against this acquisition”

    lol wut?

    EVERYONE is against this acquisition. Everyone knows it will be bad for the economy, for jobs, and for T-Mobile customers.