AT&T calls off bid for T-Mobile. Now what?
AT&T will give T-Mobile parent $3 billion in cash and another $1 billion in spectrum. But the collapse of the deal leaves T-Mobile in a tougher spot than AT&T.
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Besides such an auction, AT&T could also buy spectrum from satellite TV operator Dish Network Corp., which could require an FCC waiver because it is licensed for satellite use.Skip to next paragraph
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Many people believed that AT&T had overstated the spectrum crisis.
AT&T already has an ample supply of unused wireless spectrum that it plans to use to expand its network over the next several years. And much of T-Mobile's spectrum is already in use, so the deal wouldn't have resulted in fresh airwaves becoming available. Furthermore, AT&T has made great strides in addressing network congestion in such cities as New York and San Francisco not by tapping its unused spectrum, but by upgrading its cell-tower equipment.
Moffett said AT&T's spectrum needs aren't so grave that it needs to make a large acquisition right away.
The decision to end the bid could be a bigger problem for T-Mobile than for AT&T. Deutsche Telekom has been eager to sell T-Mobile and isn't keen on investing more in the company, which has seen revenue decline slowly with the flight of higher-profit contract customers.
Besides missing out on many of the hottest smartphones, T-Mobile has stuck to updating its existing 3G network to achieve 4G speeds.
By contrast, competitors have moved to all-new networks that use LTE, or long-term evolution, technology specifically designed to carry data. Both AT&T and Verizon are building LTE networks, and Sprint intends to use the technology, too.
Still, Moffett believes it's too soon to write off T-Mobile, saying it has a good network with lots of room for more customers.
"I think they could surprise some people and be a more important force in the market than people are giving them credit for," he said.
AT&T's stock fell 8 cents to $28.66 in after-hours trading Monday after the news came out. Earlier, it closed the regular session down 11 cents.