How Ericsson and Alcatel-Lucent to benefit from T-Mobile-AT&T deal fiasco

Major LTE equipment makers such as Ericsson and
Alcatel-Lucent will benefit from the failure of the $39 billion deal between
AT&T and T-Mobile USA.

 

U.S. operators AT&T and
Verizon Wireless are the first major
operators to build large LTE networks, with Ericsson and Alcatel supplying gear
to both carriers.

AT&T has been going slow with its LTE investments since it was planning to
buy T-Mobile and then invest in LTE infrastructure as a combined entity. Since
AT&T has decided to drop its merger plan, it will spruce up investments in
LTE benefitting telecom equipment companies.

 

The combined entity between AT&T and T-Mobile would
have put pressure on LTE equipment pricing affecting the business of equipment
makers.

 

Without AT&T, T-Mobile will be forced to invest its
own in 4G / LTE. Verizon and Sprint will try to capitalize on the present
situation.

 

Recently,
Dell’Oro announced that Ericsson and Alcatel-Lucent won more of the emerging
market for LTE wireless network technology in Q3 2011, helped by their strong
position in the United States.

 

Ericsson controlled 44 percent of the $647 million market
in the third quarter, while Alcatel’s share rose to 30 percent. Huawei, a
distant No 3 on the market, saw its share declining to 8 percent, with Nokia
Siemens Networks the fourth.

 

The decision to pull out of merger talks will clear the
air for AT&T. Recently,
AT&T has committed to increase its U.S. infrastructure investment by more
than $8 billion.

 

T-Mobile with 33.6 million mobile users is a disruptive
competitor in the market. AT&T’s intention to acquire T-Mobile was
motivated by spectrum and network concerns. Without the partnership with
AT&T, T-Mobile will continue to unveil cost effective and innovative
schemes and services in America.

 

Recently, ABI Research said that provisioning 4G services
and spectrum re-farming will provide a welcome boost to the wireless
infrastructure market. “4G equipment spending on base stations will reach
almost $3 billion in 2011 and potentially $16.5 billion in 2016,” said Jake
Saunders, VP for forecasting, ABI Research.
In 2011 approximately 32,000 base stations will be upgraded and retrofitted to
support 4G services. Approximately 19,000 base stations will be deployed onto
new sites to help infill capacity and remove dead spots and poor coverage zones
for 4G enterprise and residential users.

 

The combined telecom Capex
of AT&T, Verizon and T-Mobile, three major telecom operators in the U.S.,
decreased 7.86 percent in Q3 2011 to $9.3 billion from $10.1 billion in Q3
2010.

 

The decision to stay away from merger talks will benefit
LTE stake holders. But AT&T needs spectrum to introduce more services. The
FCC can answer their call.

 

By Baburajan K
[email protected]