In the telecom sector this week, we saw big news surrounding AT&T’s (NYSE:T) planned purchase of T-Mobile. This deal was smacked with a nasty setback when the U.S. government filed an antitrust lawsuit to block the proposed deal. Sprint’s (NYSE:S) stock was up around 15% this week as it is considered the biggest beneficiary if the AT&T and T-Mobile deal doesn’t go through. In other news, Verizon (NYSE:VZ), AT&T and T- Mobile plan to invest more than $100 million in their joint venture that lets consumers pay for goods with mobile phones, which would rival Google’s (NASDAQ:GOOG) mobile payment service. [1]
AT&T
The government filed the lawsuit against AT&T as it believes the merger would hurt competition in the U.S. wireless market and ultimately lead to higher prices in nearly all major wireless markets. On the other hand, AT&T has consistently argued that the U.S. wireless industry will remain competitive if the T-Mobile purchase were to gain federal approval. In expanding its 4G LTE network and merging the two companies’ wireless networks, AT&T has maintained that the deal would create jobs and generate economic growth.
See Government Delivers Blow to AT&T and T-Mobile Deal
Sprint
Throughout the last week, Sprint’s stock was volatile as investors were divided over whether or not the iPhone would be positive for Sprint. More so, this deal was considered positive for AT&T, as it would have been difficult for Sprint to maintain its argument against the merger that the deal would make the U.S. wireless market an effective duopoly, and one of the effects would be that Sprint would not have access to the best wireless handsets.
This week’s news of the U.S. government filing lawsuit to block AT&T’s planned purchase of T-Mobile is largely considered positive for Sprint.
See AT&T Deal Looks Bad for Sprint – What Can Sprint Do? and AT&T May Benefit the Most from Sprint’s iPhone Deal
Verizon
Through the planned $100 million venture named Isis, Verizon, AT&T and T-Mobile have created an alliance to grab a piece of the mobile commerce market. According to Juniper Research, the total value of mobile payments for digital and physical goods, money transfers and NFC (Near Field Communications) transactions will reach $670 billion by 2015, up from $240 billion this year. [2]
Notes:- AT&T-Verizon-T Mobile Sets $100 Million for Google Fight, Bloomberg, August 29th, 2011 [↩]
- Mobile Payments Market to Almost Triple in value by 2015 reaching $670bn, Juniper Research, July 5th, 2011 [↩]
