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Summary:

AT&T apparently is revving up the acquisition machine once again, this time targeting Europe mobile carriers. Buying an overseas mobile arm might be a good investment, but it does little operationally for Ma Bell.

AT&T couldn’t convince regulators to let it buy T-Mobile, so now it may be eyeballing overseas markets. According to the Wall Street Journal’s unnamed sources, AT&T has its checkbook open once again and this time is taking an interest in European operators Everything Everywhere and KPN.

Perhaps there are strategic or business reasons why AT&T would want to buy a foreign mobile carrier, but operationally it’s hard to see what it stands to gain. While there has been plenty of international investment in U.S. operators, the opposite hasn’t been true. And there are plenty of reasons why U.S. operators have tended to stand alone rather than function as globe-spanning multinationals.

It’s no coincidence that most of the big multinationals are based in Europe where the individual wireless markets are small. By launching in multiple countries, companies like Vodafone or Telefónica gain much bigger economies of scale than if they just stayed home. With such scale they can dictate pricing to their infrastructure and handset suppliers, and they can coordinate their services across borders.

AT&T flagship store logo If you’re AT&T, though, scale isn’t an issue. With 100 million connections AT&T is the 18th largest mobile carrier in the world even though it operates in just a single market. If you rank them in terms of mobile revenue, AT&T is the globe’s fourth largest carrier. AT&T has enormous leverage over its vendors. It even got Apple to design a version of the iPhone 5 for its LTE band – a 4G configuration no one else in the world uses. You can’t get more powerful than that.

What’s more, if AT&T were aiming at increasing its pricing power further, buying an international carrier would do it little good. In the U.S., carriers use different mobile frequencies, deploy different network technologies, and maintain different requirements for their handsets.

So far all of the international ties U.S. carriers have yielded zilch. Verizon is almost half-owned by Vodafone, but apart from collaborating on a few international standards efforts, the two function completely separately. T-Mobile USA is wholly owned by Deutsche Telekom, but the only thing the U.S. operator shares with its international cousins is branding and a few common carrier apps. A T-Mobile USA customer venturing onto a European T-Mobile network still pays the same exorbitant roaming rates as any other customer of the U.S. carriers. And as our European readers constantly pointing out, T-Mobile sells a lot of iPhones — none of them happen to be in the U.S.

Can AT&T's Newest Android Phone Captivate Like an iPhone?  Yes!AT&T already has international mobile interests to boot. It owns a substantial stake in Latin American wireless giant América Móvil, which AT&T inherited from SBC Communications. There’s no major cross-border coordination there either. I assume we’ll see the same independence from Sprint when Japan’s Softbank takes over the carrier later this year (though it would be awesome if Softbank brings its brilliant advertising campaigns here).

Basically U.S. operators have always acted as independent global players, through both necessity and wont. I can definitely understand why AT&T would like to grow its business internationally. It already serves a huge multinational customer base through its wireline and enterprise business, and it would like to exert that same influence in mobile. But I doubt it would get any closer to accomplishing that goal by buying international carrier like KPN or Everything Everywhere than it merely by partnering with those same carriers.

Feature photo courtesy  of Flickr user ToastyKen 

  1. Tsahi Levent-Levi Friday, January 18, 2013

    Kevin,

    This can be a step to becoming a global player instead of a local one.
    Carriers are having a hard time competing – not against each other but rather against handset vendors and other OTT players (yes, handset vendors these days are fierce OTT players).
    The main disadvantage carriers have is being local. Solving that means being able to compete better – assuming they see themselves providing services and not only connectivity and some local services to attach to it.

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  2. AT&T seems to prefer to acquire companies, and add them to its balance sheet instead of providing service without caps.

    It wasn’t long ago where AT&T was a wireline company, whom for a small monthly fee, you could call any local number.

    Today, as technology as progressed, AT&T can’t seem to offer unlimited service like it did in the past. That’s too bad.

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