AT&T/T-Mobile: Happy Xmas, Gear Vendors!

12/20/2011

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10:40 AM -- AT&T Inc. (NYSE: T) and T-Mobile US Inc. have finally bowed to the obvious and called off the $39 billion slow train wreck of a merger.

It is possible that consumers that like cheap data plans (and, who doesn't?) could soon see the benefit as T-Mobile slashes prices in a bid to get back some lost market share. As analyst George Notter points out, however, infrastructure vendors are likely to be among the people that get happy right away because the deal is off.

The Jefferies & Co. Inc. analyst writes in a research note Tuesday that AT&T "had significantly dialed back Q4 spending in order to apply leverage in its fight with regulators." He expects that vendors could even start to see Ma Bell's spending speed up in the last part of the year and definitely increase early in 2012:

Our most recent industry checks suggested that AT&T capex spending would pick up in mid-Q1. Moreover, we understand that some vendors have forecasts and orders from AT&T that indicate an extremely strong Q/Q increase in spending in Q1. Further, we expect that AT&T will be fairly aggressive in their spending in 1H’12.

Capex beneficiaries could include Adtran Inc. (Nasdaq: ADTN), Alcatel-Lucent (NYSE: ALU) and Juniper Networks Inc. (NYSE: JNPR).

T-Mobile had already "picked up their spending modestly in recent weeks," Notter notes. Once again, he expects the carrier to make up for lost time in 2012.

Of course, a bunch of vendors likely now wondering if there's a decent-sized T-Mobile Long Term Evolution (LTE) contract in their future. I'm also trying to figure out what T-Mobile's path to LTE is now.

I have to wonder if T-Mobile could follow Sprint Corp. (NYSE: S)'s lead and pull a multi-modal basestation strategy that supports both 3G and LTE on its AWS footprint now that it has additional spectrum from AT&T.

What's your take?

— Dan Jones, Site Editor, Light Reading Mobile