When AT&T finally admitted defeat in its bid to purchase T-Mobile USA, the company said the failure of the acquisition would harm customers and stifle "needed investment."
But things haven't quite worked out that way. While AT&T panned T-Mobile's prospects as an independent carrier in a world moving from 3G to 4G speeds, T-Mobile is now using the breakup fee it received from AT&T to build a new LTE network. T-Mobile announced on Thursday a "$4 billion network modernization and 4G evolution effort, which will improve existing voice and data coverage and pave the way for long term evolution (LTE) service in 2013." T-Mobile expects to cover "the vast majority of the top 50 markets."
When the T-Mobile/AT&T merger fell through as a result of opposition from the Justice Department and Federal Communications Commission, it was announced that T-Mobile would receive a $3 billion breakup fee from AT&T, which is surely helping to fuel the company's network modernization effort. The $4 billion investment figure touted by T-Mobile includes $1.4 billion in "incremental network investment" over the next two years. While it seems AT&T's prediction about stifling of needed investments hasn't come to pass, T-Mobile still faces a difficult road.
T-Mobile (which is also trying to block Verizon Wireless's planned purchase of additional spectrum) lost 800,000 customers in the most recent quarter, and is "the last of the four major US operators" to hop on the LTE bandwagon, Ovum Chief Telecom Analyst Jan Dawson said in a statement. "T-Mobile will be late to the LTE party, and its coverage will lag its major competitors for some time. Marketing the service will be tough when it has spent the last several years convincing its customers it is already offering 4G."