AT&T May Be Haunted by iPhone Network Load in T-Mobile Merger

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AT&T’s integration of its $39 billion acquisition of T-Mobile USA may be slowed down by a network already overloaded by users of Apple’s iPhone, a Sanford C. Bernstein & Co. analyst said.

The deal will give AT&T new airwaves for its planned high-speed, fourth-generation network. T- Mobile’s subscribers, who are now using those airwaves, will eventually be moved to AT&T’s network, AT&T said. “That’s probably the most ambitious piece of this,” said Craig Moffett, an analyst at Sanford C. Bernstein who rates AT&T “market perform” and doesn't own the shares. “That network is already struggling and has been ever since they landed the iPhone, so that network isn't ready to dump a bunch of T-Mobile customers onto it.” AT&T expects $7 billion in integration costs over the next three years, said John Stankey, president of AT&T Business Solutions. To free up capacity on the 3G network, used by iPhone customers, for T-Mobile users, AT&T will have to wait until subscribers move to the planned 4G network, a process that may take three to five years, Moffett said. The combined company will update its towers to allow customers to use their second- and third-generation phones across both networks, Stankey said. The higher-speed, 4G long- term-evolution network that AT&T plans to build will cover 95 percent of the U.S., the executive said. All subscribers will see the benefits from the larger network -- which will increase the number of cell sites in the overcrowded New York and San Francisco markets by as much as 35 percent -- within two years, Stankey said. The companies use the same network technologies, which makes the integration easier, he said.


AT&T May Be Haunted by iPhone Network Load in T-Mobile Merger