It's mega-merger Monday as the business world mull's AT&T's decision to purchase wireless competitor T-mobile for $39 billion. The deal is a huge one that will shake the mobile service provider market. It raises a number of questions. Here are five big ones:
Will Regulators Balk?
The biggest obstacle to the completion of this merger is regulatory risk. It's a horizontal merger, which means that it's one direct competitor buying another. It will beef up the portion of the market that AT&T controls, possibly give it access to a few more devices, and provide it the ability to improve its network a little. But regulators might not be crazy about the fact that it will provide AT&T with 39% of the market share -- putting it ahead of Verizon. The two carriers will now vastly dominate the market. The oligopolies that exist will grow even stronger.
Will It Make AT&T #1?
Even though AT&T will have the biggest piece of the market if the deal succeeds, it may still be viewed by some consumers as inferior to Verizon. It has been plagued for years by complaints about its network. But this acquisition could help to solve this problem, since AT&T and T-Mobile have compatble networks. This is actually one of the chief benefits that AT&T is bragging about. From the Shayndi Raice and Anupreeta Das at the Wall Street Journal:
On Sunday, AT&T pitched the deal as a way to solve network congestion, by combining two operators using the same technology and alleviating a spectrum shortage that would keep T-Mobile from building a next-generation network.
This acquisition could be what AT&T needs to solve its biggest problem.