With many regulatory hurdles still to be cleared, it's unclear exactly how all of the elements of AT&T's proposed $39 billion acquisition of T-Mobile USA will fall into place. But almost one thing is certain: the post-acquisition company will not look like a simple combination of AT&T and T-Mobile (or AT&T&T, as some have put it).
"Much will depend on what sort of conditions the watchdogs will put on this merger," Aapo Markkanen, industry analyst at ABI Research, emails Marketing Daily. "There's no way that it will go through without big concessions, which will either level the playing field or prompt AT&T to walk away from the deal."
Indeed, as Credit Suisse analyst Jonathan Chaplin put it in a research note, the proposed deal is unprecedented. "We have never seen a deal with more regulatory risk be attempted in the U.S.," he wrote. But he added that it was "unlikely" AT&T would attempt the deal if it believed it would not eventually earn approval (albeit with "massive divestitures and concessions," Chaplin said).
Should the deal -- which AT&T admitted could take up to a year to be finalized -- go through, consumers will likely see the disappearance of the T-Mobile brand as well as a convergence of pricing plans and perhaps, an improvement in AT&T's oft-maligned network, Markkanen says. "I doubt AT&T would run two separate brands or price strategies for too long," he says. "On the upside, for the current AT&T subscribers the coverage and the quality of service should improve quite notably from what they have experienced thus far -- from AT&T's side this acquisition is after all mainly about taking a shortcut to a better network."
It's also possible the deal could spur another wave of consolidation throughout the wireless industry. Already, speculation has been that Sprint may look to acquire one of the regional carriers, such as MetroPCS or Clearwire, and it will put some distance between the top two carriers (a merged AT&T/T-Mobile and Sprint) and the third-largest carrier, Verizon.
"If AT&T and T-Mobile do merge, it does make a rather strong case for consolidation among Sprint and the regional carriers," Markkanen says. "As per Verizon, they could also be interested in the regionals, but a move on Sprint should be out of the question."
Given the uncertainties, it's also unclear whether either AT&T or (perhaps more importantly) T-Mobile will change its marketing tactics regarding the other. T-Mobile is currently running a campaign touting its 4G network that openly mocks the iPhone and AT&T's network. But that message will likely change to one that stresses the technological superiority that could one day become a part of AT&T's network.
"I think they're just going to stop [those ads] and just fade away," says Robert Passikoff, president at Brand Keys. "If you assume both companies want to go ahead, wiser councils would suggest stop beating up the company that's going to pay you a bazillion dollars."