Who's Hurt if T-Mobile USA Vanishes?

We all know the AT&T Inc. (NYSE: T) acquisition of T-Mobile US Inc. (should the deal get completed) creates new competitive issues for Verizon Wireless , Sprint Corp. (NYSE: S) and other carriers.

But T-Mobile USA's exit could also cause some heartburn for its suppliers.

Here's a quick look at who might be affected, keeping in mind that some of these changes might be very slow to unfold.

  • Nokia Siemens Networks. AT&T uses Alcatel-Lucent (NYSE: ALU) and Ericsson AB (Nasdaq: ERIC) for mobile infrastructure, while T-Mobile USA uses Ericsson and Nokia Networks . Given AT&T's propensity for picking two suppliers per product domain, NSN would appear to be the odd man out. Analysts seem to all agree on this point.

  • Equipment vendors in general. Fewer major customers means fewer avenues of business, an ongoing problem for telecom suppliers. The news here isn't all glum, though. George Notter, an analyst with Jefferies & Company Inc. , pointed out in a Monday note that Tekelec benefitted when AT&T bought Cingular and when Sprint bought Nextel, because its signaling gear was useful in letting subscribers roam the resulting joint networks.

    And Analyst Michael Genovese of MKM Partners points out that AT&T's IP and optical vendors -- Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (NYSE: JNPR) for IP, Ciena Corp. (NYSE: CIEN) for optical -- could benefit from network growth as AT&T accommodates 33.7 million additional T-Mobile USA users.

  • Mobile backhaul providers. T-Mobile USA leases capacity for its mobile backhaul, and AT&T doesn't have to. The cost benefits AT&T gets from the merger "will come out of the revenues of independent fiber operators, large and small, one way or another," notes Rob Powell in a Monday posting on his Telecom Ramblings blog. Regarding T-Mobile USA's backhaul suppliers, he cites 2008 deals with Bright House Networks , FPL FiberNet LLC , IP Networks Inc. and Zayo Group Inc. (NYSE: ZAYO)

    For the time being, T-Mobile USA will probably continue its backhaul buildout for High Speed Packet Access Plus (HSPA+) services, so doomsday might take a while to arrive. (See MWC 2010: T-Mobile Boosts Backhaul.)

  • Lightsquared. T-Mobile USA had a reason to become a wholesale customer of LightSquared . AT&T, not so much.

    LightSquared would have plenty of other places to turn, such as MetroPCS Inc. (NYSE: PCS), Sprint or the U.S. cable operators. Even so, T-Mobile USA's disappearance would make LightSquared's viability "a bit more uncertain," Notter writes. (See Which Carriers Is LightSquared Working With? and LightSquared Grabs More Spectrum, Customers.)

    For more
    You have heard AT&T is buying T-Mobile USA, right ...?

    — Craig Matsumoto, West Coast Editor, Light Reading

  • Pete Baldwin 12/5/2012 | 5:09:43 PM
    re: Who's Hurt if T-Mobile USA Vanishes?

    Here's a statement from Nokia Siemens, emailed to us this a.m., about its positions with AT&T and T-Mobile, including the ongoing work with the latter. 

    "We acknowledge the announcement of the agreement between Deutsche Telekom and AT&T for AT&T to acquire T-Mobile USA as a sign of the dynamism and vitality of our great industry.

    "Nokia Siemens Networks is proud to be a supplier and partner both of AT&T and of Deutsche Telekom – both in Europe and in the US – and we support our customers in the strategic moves they intend to make.  We recognise that the deal requires regulatory approval and will continue to offer AT&T and Deutsche Telekom the same level of service and support, regardless of the outcome of the regulatory review.

    "As a leader in both LTE and providing smart networks, we believe we have a significant opportunity to help American operators deal with the unique demands of smartphones and tablets.  This deal does not diminish that belief.

    "Our business with T-Mobile USA: we are currently working with T-Mobile US on projects including the standardisation of Long Term HSPA Evolution, supporting speeds up to  650 Mbps.  Nokia Siemens Networks is a strategic radio partner to T-Mobile US.  We supply around half of the 3G/HSPA network and a little under half for 2G.  We are a sole supplier for Subscriber Data Management, SGSN Core and Performance Management services.

    "Our business with AT&T: about half of AT&T's 2G network was built by Nokia Siemens Networks.  Today, we are a supplier to AT&T in optical transport (DWDM), network implementation and care services."

    I know this is off-topic, but: interesting that they mention the optical part. Nokia Siemens reportedly wasn't picked as an optical domain supplier but told us that wouldn't stifle all their chances in AT&T's optical network:


    zbulut 12/5/2012 | 5:09:33 PM
    re: Who's Hurt if T-Mobile USA Vanishes?


    Let me count ...


    LR says: One, two and ... three. Oh, there are three here ...


    wdbarrett 12/5/2012 | 5:09:20 PM
    re: Who's Hurt if T-Mobile USA Vanishes?

    I switched to Tmobile because of ATT's high prices an lousy service.  With ATT, on a 15 mile stretch of I-5 from North Orange County to South Orange County, my calls would drop no less than 7 times.  By switching to Tmobile, I could enjoy uninterrupted calls and save $10 per month.  Oh well, it was too good to last.

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