Cingular Wirless buys AT&T Wirless to create a bigger MNO than NTTDoCoMo in the US market
Today, the news is out: Cingular Wireless is going to buy AT&T Wireless to create the biggest MNO in the US market through this transaction. Is this big news? Yes, I do believe so, for a couple of reasons.
First, the number 2, Cingular Wireless with 24 million subs, joins forces with the number 3, AT&T Wireless with 22 million subs to overtake the former number 1, Verizon Wireless with 37.5 Million subs.
The new Cingular-AT&T Wireless power house will have more subs than NTTDoCoMo. For any content and application provider this is paradise because it means an incredible target market opportunity. And, many of us know that being attractive for content and application providers can make a huge difference in the mobile data market. Although it will take a good amount of time until all the platforms are integrated this footprint "just is it".
Second, this transaction proves that the mobile industry is "in" again: A cash valuation of 41 billion US $ for adding another 22 million customers results in a valuation per subscriber of 1.864,- $. This is a lot of money. And it takes a good deal of customer loyalty to make such an investment pay off.
Third, it is proving the trend that consolidation - less market players with more power each - is still in fashion in the wireless industry. Consolidation is happening in other markets, too. For example, E-Plus and O2 Germany are rumoured to team up, too.
Fourth, the GSM camp will come out of this phase even stronger compared to Verizon Wirless and Sprint PCS that rely on Qualcomm to provide the latest and greatest CDMA technology. However, in the end Qualcomm and others will offer chip sets for devices that understand any air interface standard on any frequency which will be ultimate platform for consumer choice. Then the fight for loyal mobile subcribers will not be decided by technology choices but rather by marketing choices.
Who's going to win in this updated version of optimising the power of economies of scale? Well, me, myself and I, being a fan of the best wireless technology enabling the highest bandwidth for the lowest prices, I do believe that this consolidation will ultimate just accelerate the competition of the big players in the US market. And accelerated competition tends to be good for consumers.
While we Europeans used to think that we are innovative, I have come to the conclusion after studying Japan, Korea and the US market, that "all animals are equal again". This is to say that nowadays it is a question of mixing innovative marketing and powerful technology and services in the best way possible. The world is watching to find out which mix creates the highest ARPU and the biggest profits catering to voice and data consumers on the move.
Knowing that integrating two super big MNOs is not an easy task the remaining few have some time to think about how to challenge the new "number one".
So, let Cingular Wireless merge with AT&T Wireless and let Vodafone buy the majority of Veriozon Wireless. Then we will have 1 big GSM camp fighting against 2 CDMA speedboats in the US market, i.e. Verizon Wireless and Sprint PCS. Myself, I just hope that his new development will make mobile data services more powerful and more easily affordable for all of us.
BTW, I wonder what AT&T will be doing with 41 billion $ in cash. Any fresh ideas for investing into the mobile broadband future?
