Thursday, September 1, 2011

Fortune's Post About A Bigger AT&T With T-Mobile In Its Belly Would Mean Lower Cost But Not For Customers

This Fortune post got it right.  The meger between AT&T and T-Mobile would mean it would cost less for the mega-AT&T to serve about 130 million users than serving just 100 million users.  It's simply economics.  What the post failed to say is that these cost savings won't translate to lower bills for the customers.

It's about maximizing profit for the company and, ultimately, adding value to the shareholders.  Billings to customers will be the same.  Elimination of a competitor that prides itself with value mobile plans means it won't have to worry about customers looking for a better value.  It also means AT&T is free to increase prices if it wants since customers will not longer have the choice to go to another GSM carrier.

So, when the author, Scott Woolley of Fortune, said that AT&T overlooked this argument for the merger, it most certainly did not.  In fact, had it brought this argument up, it might not have worked in its favor.

As I've said before, none of AT&T arguments for the merger made any sense at all.  Some of its own figures seem to go against the merger at times.  

Furthermore, othing in AT&T's arguments support the merger mention cost savings would be passed along to customers.  Why?  Because it won't.  And while AT&T dangled a carrot, hiring 5,000 more employees should the deal go through, its history said that job cuts will happen else where in the new company.  

If anything, Woolley should just come out and say what's on everyone's mind.  It's about greed.  Just now, we learned that AT&T has eliminated a popular feature called A-List that allow users to pick up to ten friends that they select for unlimited calling (Electronista).  

Greed.  That's what this merger is about.  Plain and simply.  Nothing more, nothing less.

Source:  Fortune.

Note:  Most of the time, I find mergers to be very exciting news for the market  It generally does create opportunities.  Here through, that's not the case.

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