Duestche Telekom- to Sell VS or Not to sell

I would like to see Deustche Telekom form a merger between AT&T and Voicestream, as they are talking of doing this now, and have DT in sole control of this new joint company. I would like to see the name carry over to T-Mobile all throughout, thus eliminating the AT&T name, which I'm sure they wouldn't mind getting rid of anyways, since AT&T Wireless has nothing to do with AT&T Corp.

 

a powerful potential for this acquisition - attws gets the gsm network and the international coverage it lacked plus a bigger customer base, presumably current VS consumers will benefit from atttws superior cust service, corporate account administration. VS is abysmal in this area and never got over their origins as a company selling to individuals and developed powerful account administration processes

but... with less low-cost competition watch for escalating prices.

 

Voicestream's business ethics and the way they treat their customers is very excellent. I would hate to see AT&T getting their hands in such a good company as Voicestream because they can only damage Voicestream's good practices. To me, the merge can only have negative effects on Voicestream, unfortunately translating into higher prices and less freedom to customers (which are well known AT&T attributes).

 

I would rather see them not merge at all, then to have the AT&T name on my phone.

This is my solution to the problem though, if DT can bear it: "I would like to see Deustche Telekom form a merger between AT&T and Voicestream, as they are talking of doing this now, and have DT in sole control of this new joint company."

 

I would hate to see VS dissapear also Chris, but the reason this deal is on the table is because DT doesn't want VS for financial reasons.

 

It's not that DT doesn't want VS.....they do. But, they have a mountain of debt, and the only real jewel in their bag is VS. They need the money that VS will give them via selling. Or, they could spin off T-Mobile International (20%) and get the money that way but they have delayed that for almost two years b/c of "market conditions."

 

FWIW - Actually I have found AT&T Wireless customer service superior to that of Voicestream .

 

ATT actually has excellent customer service...sure you'll sometimes get an airhead on the other line but they have always been patient with me...sometimes half an hour on the line to comb through some of the promo options. However, from what I have heard, ATT may have somewhat subpar CS reps in the NY region. Earlier this year when I had opted for a contract extension to take advantage of some new promos, there were some billing errors that caused my balance to skyrocket to $400. CS rep was easy to work with in rectifying these errors.

One thing I did like about AT&T's plans was the flexibility to make changes part-way through your billing cycle without having to go through a pro-rating system like with some of the other carriers. If I made a change in the middle of my billing cycle then that change would apply retroactively to the beginning of my billing cyle. Yes there were other downfalls like the fact that they don't have a National Share plan but AT&T did score some plus points in some areas.

Analysts have indicated that the market cannot support so many carriers with differing technologies -- some type of consolidation is bound to occur. I don't care if Voicestream is nice to customers and what not cause the real question at this point is this...does Voicestream want to build a national GSM footprint that can compete with Verizon on a National level? Yes? Then hook up with AT&T. AT&T has done a fantastic job of overlaying GSM as fast as possible in the major markets. Hell it won't be long before they have a better GSM network over Cingular in Califnornia.

Let AT&T migrate the 800mhz tdma markets, especially in much needed city outskirts where Voicestream may not reach. By the way, I was just in Owings Mills (suburban Baltimore) and my Verizon and AT&T had strong signals. Well I was in a meeting with one of the hotel GMs and he was surprised I could use my cellphone in the room. His exact words were this: "Voicestream coverage sucks here" My point is...AT&T can help Voicestream to cover some major gaps and holes.

 

would like to see the name carry over to T-Mobile all throughout, thus eliminating the AT&T nam
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In your dreams.

 

attws gets the gsm network and the international coverage it lacked plus a bigger customer base, presumably current VS consumers will benefit from atttws superior cust service, corporate account administration
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Yes.

 

It's decidedly not clear from the numerous articles (all of which seem to be based on the same press release or the other articles and thus all contain the same non-information and speculation) exactly what DT's plans are in all of this.

If their idea is to get rid of VS, then simply merging with another company won't do that. They will still have a large -- perhaps dominant -- share of the merged company -- which will still be worth a lot less than they paid for VS in the first place. But whether the total value of their holdings will be more or not.... There are still current shareholders of ATTWS who will need to be satisfied.

Being the dominant partner of the SECOND largest cellular company in the US can't be a BAD thing, but it's not at all clear that it would do much -- quickly -- for the bottom line. They would end up with 800MHz spectrum, 1900 spectrum, TDMA, GSM, and analog and would probably look a whole lot more like Cingular.... How many bands/modes/phones would you have to support...

Whether the DT/European connection would be enough to make them profitable is questionable.....

 

I agree that AT&T will greatly help with coverage filling the gaps that VS has. I would just hate to see people loosing the flexibility they have with Voicestream as customers. AT&T is not very competitive pricewise and to me they seem too controlling over their customers.

 

If this happens, it is DT selling VS to AT&T, who would then merger the two together. DT/T-Mobile would disappear in the USA.

 

I don't want this to happen.

 

<< I don't want this to happen. >>


CINGULAR hinted today that it wants to merge with VOICESTREAM w/ VS the dominant shareholder. Who knows it could be a 3 way merger.

 

This wouldn't be permitted by the FCC for a 3-way merger. There would be no competition on the GSM network. However a 3-way merger would be nice. How do you know that Cingular hinted about wanting to merge with Voicestream.

 

I don't want to see a three way merger at all, they would corner the GSM market and hurt competition. The FCC would see it the same way though I am sure and not allow it. If Cingular/VoiceStream merge or AT&T/VoiceStream thats fine, but not all 3.

I want there to be 2 nationwide GSM carriers.

 

That "Cingular hinted" message came from an anonymous source. Might be a joke, Chris. A 3-way merger will also kill competition in the TDMA business and I don't think uncle FCC would like that.

 

I thought it was a joke too, but I read the article on a different thread today too. It says that the CEO of Cingular welcomes a DT merger with the Voicestream unit.

 

Any antitrust review of a merger won't be based on its competive impact on GSM vs. TDMA vs. CDMA. For antitrust purposes, those aren't relevant markets, they're simply technologies. The review would instead focus on whether eliminating a provider in, say, New York City, would adversely affect wireless competition in the NYC area as a whole.

Let me also be the contrarian and say that maybe a Voicestream merger wouldn't be such a bad thing for it. The single biggest weakness for the company is its sparse coverage, a situation that won't improve anytime soon with the parent company saddled with so much debt that the capital expenditures necessary to really expand the network aren't going to materialize anytime soon. In the long run, a merger with a bigger provider that is also committed to a GSM roadmap will help improve coverage. The question is who that provider will be. AT&T is spending billions on building its GSM network but that's a double-edged sword: it's accumulating so much debt that it may not be able to buy Voicestream or if it did, may be in the same position that Deutsche Telekom is in right now. Who can say, we'll just have to see how it turns out.

peter

 

Well said Fickle!

 

Well the problem isn't neccessarily Voicestream's coverage areas, it would help to expand, but Voicestream needs more customers, and more customers bring more money, and more money brings DT out of debt. Voicestream did place #3 I believe in the second quarter of this year. They added over 500,000 customers again, giving them a total of over 8 million customers. I know they will probably get 2nd place 3rd quarter since they are launching the California/Nevada market in four (4) days. That will.should bring in alot of customers.

 

Chris they didn't get 3rd place yet, that was just an assumption. It will probably be right, but there could be a surprise. VS was the first carrier to report, and they only rushed out the good news b/c CEO Sommer is about to get booted out...

 

Yeah I know. He really wants to keep Voicestream though, but they are angry because this isn't going to help their debt. This really sucks for DT to get rid of Voicestream. I mean they would pay off some of their debt, but then they would be back to square one, almost the same company they were a year and a half ago. Their goal was to be the first seemless transatlantic wireless provider, but without Voicestream, they can't do this.

 

The problem is that Voicestream's 8 million customers pales in comparison to Verizon's 30 million, Cingular's 22 or AT&T's 19.5. Adding a couple hundred thousand net subscribers is a drop in the bucket, especially because subscriber growth rate has slowed as the wireless market nears the point of saturation. New subscribers are becoming scarcer because almost everyone who wants a cell phone has one already, which is why companies are pushing text messaging or other services so hard and converting to GSM/GSPR; they're trying to drive up revenue per customer. On its own, Voicestream will never catch up. The economics of the wireless market make it almost inevitable that Voicestream as a standalone company will cease to exist. The only questions are who and how much.

Letting go of Voicestream would be a 180 degree turn in strategy but Deutsch Telekom's debt is over 60 billion euros and shareholders are not happy. Deutsche Telekom won't revert to its former condition completely; I think it will retain a significant equity stake in any new company, even if it is not a controlling one, which will allow it customers to roam. That was why the Cingular CEO made a point of emphasizing that he would be open to DT retaining a significant equity position. He wants to keep the door open.

peter
Moderator: you've done your research- keep it up!

 

Excellent posts, fickleguy.

 

Yes, excellent commentary Fickleguy. I agree with your thoughts. And as I have mentioned in previous posts, if Voicestream wants to compete with some of these other carriers on a national level (such as Verizon) then it would be good (like you said) to merge with another company like Cingular or AT&T who have outlined a GSM path.

Voicestream doesn't have the existing spectrum nor deep pockets (big Daddy is $65 billion in debt) to expand coverage (there are lots of places where Voicestream still could use some coverage) and to upgrade to wCDMA -- costing billions of dollars and where will they get this money from?

Realize also that the more citTies Voicestream covers, the bigger the customer base. Right now they don't even have service in Buffalo/NY and many other cities and are now just opening their doors in California/Nevada. You can't compare Voicestream's national coverage to Verizon's. Voicestream merging with Cingular or AT&T would really help to leverage a formidable GSM presence/footprint.

Moreover, investors are eyeing carriers who have a solid customer base paying good monthly rates -- not dirt cheap best bang for the buck plans.