5 Biggest Losers from the AT&T / T-Mobile buyout.

A lot of people in telecom are watching the AT&T / T-Mobile merger but many more people need to watch what is going on.  We’re looking at the foundation of another MABell but this time we could have two MABells and with wireless as opposed to the big wire line behemoth that was broken up in 1984.  AT&T should remember this well.

Everyone thinks that if the government allows it then it is good for everyone, right?  Wrong.  Clearly the big winner will be AT&T – they’ll have roughly 130 million subscribers or close to 1/3 of the US wireless consumer base.  Verizon would be second with 101 million and Sprint would be third with 50 million.  Just to give a hint at the spread, Metro PCS would be fourth with a whopping 8 million.

So, who would be the losers?

1) T-Mobile customers.

All of you with nice T-Mobile plans will lose them and you’ll end up with much higher bills (who said it would lower your bills?).   Don’t think it is just voice, it is also data plans, too.

2) T-Mobile employees

42,000– that’s a big number.  That’s the number of employees that T-Mobile has according to their quarterly statements.  These jobs range from high level executives to call center employees, network engineers, retail employees, trade show representatives, advertising, etc.  We’ve seen it in the past where a merger led to layoffs, often in the tens of thousands range.  We can easily guess at least 25% of these people will get pink slips within 6 months of the buyout being finalized and probably another 50% a year after that.  That’s about 31,500 people who will be out of a job within18 months. Most likely within 2 years after this that number could be over 35,000. When is a large layoff like this ever good for anyone other than job placement agencies?

3) All the smaller carriers

There is no way companies like Metro PCS (8 million subscribers), Clear (6M), US Cellular (6M),etc.. could compete against a post-merger AT&T, especially if they are GSM based. You can kiss these companies good buy within 5-10 years.

4) Sprint

If the government allows AT&T to buy out T-Mobile then there is no reason for them to stop Verizon from buying Sprint.  If this happens then Sprint subscribers will also face higher bills and data users will lose the only truly unlimited data plans that still exist.  “Unlimited” will no longer mean what it is supposed to mean. Also, as stated before, roughly 75% of Sprint’s workforce (30,000 employees out of 40,000) would most likely get pink slips within 18 months. Plus, between AT&T and Verizon they would have 277 million subscribers out of 309 million.  This means over 89% of the US wireless customer base will be under two companies.  And they call that “competition”?

5) The US working class

Despite higher bills from AT&T and the same if Verizon decides to buy out Sprint the average US citizen, who is most likely struggling now, will have to face higher bills and more inundated stores and call centers.  Higher bills, longer wait times, and large corporations who are managing what is considered a necessity today acting more apathetic will only lead to people either signing up for lower end plans (if the even exist) or eliminating their cell phones all together.

The only true beneficiaries I see out of this merger are the high level executives who will make sure their own wallets are fully padded and maybe some congressmen who get “political donations” (a.k.a. bribes) to vote their way.  AT&T&T is clearly not in the best interest of anyone.

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