Well here we go again. More consolidation in the world of US Mobility. Unless you live under a rock, you will have heard that Verizon Wireless has agreed to purchase Alltel for a mere $28.1 Billion - with a B. The breakdown is actually $5.9 Billion for assets and another $22.2 Billion in assumed debt. Jeez - unbelievable numbers. The deal will of course have to go under regulatory scrutiny and VZW will probably have to cede some assets where it will be considered "too dominant" in certain geographies. I think this last point is a little silly, but I digress. I actually think this news is a good thing and should hopefully create some more M&A activity.
There's no question there will be much speculation regarding which regional carrier will be acquired next, but given the hour, let me go out on a limb. I want to see T-Mo buy out Sprint.
Yes, you heard me say that. I firmly believe that a consolidation within the mobility marketplace is needed...with some caveats. If VZW gets Alltel, that means the combined company will have about 80 million subscribers. AT&T currently has about 71 million. A combined T-Mobile/Sprint would net out around 80 million as well. I'll argue that when there is such an even playing field, competition will actually heat up! Customers, both consumer and enterprise, will ultimately benefit because it will enhance competition. This is not like the cable players where they have for all intents and purposes regional monopolies. While having only three carriers would create an oligopoly, tell me how there isn't one already?
Also, look at other countries - specifically European. How many carriers do they have? Typically three our four and far more often that not, no regional players.
So back to VZW and Alltel. No brainer here. They are currently on the same 3G platform (EVDO Rev. A) and have both announced their intention to move to LTE for their 4G initiatives. This creates great economies of scale for both organizations in terms of deployment costs. I would also love to see when VZW goes to LTE that they change the brand to Vodafone - what an incredible global presence that would create! Pipe dream, I know, but a man is allowed to dream...
Then, if T-Mobile can buy out Sprint (w/o the Clearwire WiMax stuff), then they will have an opportunity (i.e.: need) to accelerate their LTE transition. If they can actually do a better technology migration than Sprint did when it bought Nextel, then that too could become a formidable opponent. This would also be a great play for T-Mobile's global presence. From an enterprise mobility perspective, it would certainly make things interesting because T-Mobile would now be forced to care about the area it has expressed no interest in - the enterprise. Who knows if they could succeed there seeing how they have little experience in it, and Sprint has certainly had more than one hiccup in that space lately.
The interesting thing is that in this crazy scenario I am painting, AT&T would actually become the number THREE player when it's currently #1 - how insane would that be? Maybe I should stop now and go to bed before I go completely insane...
