The Banking and Strategy Initiative

Chillin' out till it needs to be funded

The AT&T $4 bln | Advantage Dealbook

Today’s news: The break up fees is $4 bln as per AT&T as it counts the non cash spectrum component for its $1 bln book value /. It is more than 1 khz and as per market value is more like $ 3 bln which T-Mobile computes the value adding to its balance sheet as the deal is formally a no show today

Yesterday’s news: The deal is not coming through and AT&T’s efforts at best seem comic relief for the seriousness accorded to them a t the Department of Justice and the FCC

What matters?

First, it has been a setback for AT&T and despite the $ 6 bln credit , a bigger setback for the barely no. 5 T-Mobile / Deutsche Telecom, that looks at the debris of its US foray as its partner and friend that would continue to struggle with more Anti trust reviews if it attempts to team up intra circle and inter circle on the LTE (4G ) launch or the data and voice business for both operators.

Second, Verizon has used the time while the deal was in court to buy $ 3 bln worth of spectrum to add on to available bandwidth for its 4G launch, the cornerstone of all US mobile industry criticism being its unique scarcity of reach despite a multitude of operators, a weakness T Mobile patched into when Deutsche Telekom entered the USA a seven years back in earnest.

Third, Verizon’s 4G has covered ground on its initial disadvantage as AT&T with sole rights on the iPhone and a HSPA+ network that beat 3G speeds easily had a lot of brand equity in the data market. However going ahead, it has to buy rationed spectrum pieces from FCC and limit its rollout to keep  any competitive advantage with the “big red” network having delayed roll out planned for June 2011 by a good 3 months already

Fourth, As of now AT&T is entering a roaming agreement with T Mobile and Deutsche Telekom continues to anticipate a $16 bln EBITDA for the year with or without the break up fees. T mobile is speculated to be weighing options between investing billions into the US market to make their presence viable or exiting with a different option now that AT&T has been disallowed.

Facesavers?

AT&T will rely on continuing 20 mln unit sales of iPhones and probably the same number of iPads per quarter with estimates of a 84% growth taking iPad numbers to 14 mln for December(LAT). Fewer tied iPads are sold because of a Wifi usage for the unit and its usage for e readers. Smartphones have been given the thumbs up by recent market research and for iPhone, competitors like Blackberry and others have been given the thumbs down.

Apple is the ultimate winner as HTC models are additionally banned from today for the over 12 models Apple represented against ( basically all full screen/ touch screen smart phones) The punch – AT&T pays $600 a pop for each tied iPhone 4Gs that it sells with a 3 year plan, so it has a lot of ground to cover before it makes a profit on that deal.

 

Enhanced by Zemanta

Archives

%d bloggers like this: