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philyew

@consolidated.net
reply to ConstantineM

Re: 6 billion USD worth of spectrum, roaming and cash!

No cause for excitement. The compensation is to go directly to Deutsche Telekom (DT) and doesn't have to be used by the TM USA business. While the spectrum can't be used overseas, it is possible that it could be sold on to other carriers and the proceeds directed to DT as well. Certainly, the $3 billion cash component will be used by DT to bolster the depleted revenue they have experienced over the last 2+ years while TM USA subscriptions have been in constant decline.

said by ConstantineM:

I'm a T-Mobile USA customer, and I'm very excited about the 5 to 6 billion USD worth of spectrum, roaming and cash from AT&T to improve our most affordable 3.75G network.

The deal has been dead since long ago; I'm surprised people didn't believe it's not going to go through.


ConstantineM

join:2011-09-02
San Jose, CA
I'd be surprised if DT takes out all of the cash for itself, without any extra T-Mo USA investment, or would even think about selling the spectrum gained. Yes, they do want out of the US market, but not at any cost. They wouldn't purposefully sabotage their own prior investment to get a short-term gain. They're not AT&T. I'm willing to bet that a noticeable amount of those 5 to 6 billions would end up in the T-Mobile USA budget for network improvements, including some future LTE plans.

In the long term, however, the only way to get T-Mobile USA out of the downturn is an LTE network supported by iPhone. Funny how nowadays a phone manufacturer can decide the fate of a major nationwide carrier!

We, as consumers, can only hope that the industry will sort out the recently-reported discrepancies about the incompatible LTE bands / networks / handsets, even within continents and within frequency bands that supposedly seem similar; otherwise, there'd be a real mess indeed.

Funny how GSM only has two bands in NA, plain and simple; UMTS — 3; LTE — hmm, seemingly AT&T and VZ use the same 700 MHz band, yet their LTE handsets managed to still be incompatible, since different parts of the band are used. WTF?


philyew

@consolidated.net
I think we will have to agree to disgree here, Constantine.

As a long-standing TM customer, I've closely observed how TM's management, at the behest of Deutsche Telekom, has done everything in its power to bolster short-term revenue over the last 6-12 months at the expense of the longer term security of the business.

They've been caught short on this approach because the shrinking prospect of a deal, if it is to happen at all, is getting pushed further and further back. As a result, they've had to make some recent moves to assuage their deeply pissed off customer base. Minor stuff nonetheless.

I don't see any hint that they are investing anything in the company which will not yield a return on investment before their expected departure date. Running the company as a "discontinued operation", as DT are doing, requires that they only make investments which will clearly return money to their stockholders. They'll need to see the post-AT&T market value of the company before any investment decision can be made.

Until AT&T stepped in, this whole adventure added up to a huge loss for DT. They poured $55 billion in purchase cost and assumed debt when they acquired the company 10 years ago. I saw a report of analysis from a private investment bank some months ago that said that, if they cleared the $39 billion deal with AT&T, DT would walk away with a TOTAL profit of around $700m over the whole lifetime of the deal.

Until AT&T stepped in, they were at the table with Sprint discussing a deal probably worth around 60% of what AT&T offered. That's the measure of the loss that DT were willing to take.

DT are not exactly in the most robust health over in Europe and they need funds from divesting TM USA to bankroll their necessary network upgrades over there. Because of the commercial timelines impacting that, I don't think they have the luxury of sitting out the situation in the USA and investing in TM's future until the "right price" comes along again.

Don't get me wrong, I think it would be good if they did, but they would have to do a lot in a relatively short space of time to get on board with LTE competitively, and DT have studiously avoided that kind of investment commitment here in the past.

I guess we can only wait and see.


karpodiem
Hail to The Victors
Premium
join:2008-05-20
Detroit, MI
You've done your homework on TM, and I agree with most of your statements. Who do you see gobbling up TM? Or will they liquidate?