The removal of one big US wireless carrier would create questions for those suppliers that aren't on AT&T's roster

Craig Matsumoto, Editor-in-Chief, Light Reading

March 22, 2011

2 Min Read
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 ...?

    • AT&T to Buy T-Mobile USA for $39B

    • What Happens to Sprint After AT&T/T-Mobile Merger?

    • Could AT&T/T-Mobile Deal Mean an HSPA+ iPhone?

    • AT&T/T-Mobile: Riddled With Regulatory Risk

    • DT's Shares Rocket on AT&T Deal

    • Cable Could Lose Wireless Bargaining Chip

    — Craig Matsumoto, West Coast Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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