Much the chatter and speculation on how the wireless industry may evolve as AT&T attempts to acquire T-Mobile for $39 billion concludes with a common question: Will Verizon acquire Sprint next? After all, the AT&T, T-Mobile deal will result in the combined carrier possessing 39% of the market, surpassing Verizon's current industry-leading 31% share. But if Verizon acquires Sprint, it would be back on top with 47% of the market. Yesterday, however, Verizon's CEO said the company isn't interested in purchasing Sprint. This makes sense for several reasons.
The AT&T, T-Mobile Deal Is a Reaction, Not a First Move
We're naturally tempted to wonder about whether Verizon would want to purchase Sprint in the first place because it seems like AT&T's action deserves a Verizon reaction. But actually, it's the other way around. In 2008, Verizon acquired small rival Alltel for $28 billion. One industry source I spoke with said that, in many ways, what Alltel did for Verizon is similar to what T-Mobile would do for AT&T. Verizon does not need to react: its strategy is already set.
The AT&T Deal Is a Spectrum Play
That same source believes that the AT&T, T-Mobile deal is all about spectrum -- the scarce resource that provides wireless carriers with network capacity, rationed by telecom regulators. This week's deal will provide AT&T with more spectrum to play with, something it needs if it wishes to expand its network. And as providers push out their 4G networks, they'll need even more spectrum to satisfy the additional capacity that mobile users will demand.