Monday, March 21, 2011
When Giants Dance
Just one day before the start of CTIA in Orlando, the news of a merger between AT&T and T-Mobile U.S. comes as quite a surprise considering until this moment the headlines had the Deutsche Telekom division all but rebadged as Sprint. Either way, the wave of market consolidation continues, and if AT&T succeeds, the U.S. wireless market will be reduced to three primary players: AT&T, Verizon and Sprint.
For sure, the post-3G scenario of M&A is upon us, with the worldwide telecom industry already on pace to have another busy year. For deals that do go forward, consolidation will bring inevitable changes in personnel, technology and data management that can negatively affect the financial upside of any combination.
When telecom Giants dance, the winners in the “game” are the ones who embrace the most efficient processes. As we’ve seen with smaller scale U.S. acquisitions, the inability to assess the true value of acquired network assets puts carriers at a disadvantage to make swift and informed decisions regarding CapEx efficiencies that directly impact profit. This is as true for the new (potential) combined entity, as well as Verizon and Sprint as they compete in the new world order.
That said, if AT&T's senior management endeavors to achieve the synergies they say will exceed the deal’s $39B price tag, supply chain efficiencies and investment recovery strategies will be key. Let the dance begin.
