ATT's Two-Acquisition Week: Latest Buy Is Centennial

AT&T Inc. (T) today agreed to a $944 million purchase of rural cell phone carrier Centennial Communications (CYCL). The purchase would add 1.1 million subscribers to the 74.9 million already on AT&T Wireless. By comparison, AT&T Wireless added 2 million net new subscribers in its 3rd quarter, half of them iPhone users new to AT&T.

However, as RCR Wireless reported,

The deal will not, by itself, help AT&T regain the top spot in the U.S. market. Although the carrier currently holds the position, it will soon to lose it to the combination of Verizon Wireless (70.8 million customers) and Alltel Communications L.L.C. (13 million customers).

And that’s about it for adding a large number of US cellphone customers. According to Wikipedia, there aren’t a lot of compatible (i.e. GSM) carriers left for AT&T to buy. Since a purchase of #4 T-Mobile would not pass antitrust muster (even if it were for sale), the three network owners with more than 1 million subscribers — US Cellular (6.2m), MetroPCS (4.8m) and Cricket/Leap (3.5m) — all use CDMA.

This is AT&T’s second effort to expand its exposure to wireless. Earlier in the week, AT&T

spent $275m

to buy Wi-Fi hotspot provider Wayport. The timing by AT&T seems curious since the hotspot business is

so thoroughly commoditized,

even though the recent financial meltdown means the price was lower than it would have been in July.

Given the state of the industry, it seems like a merciful exit for Wayport investors. They

earned a 73% gain

on money that was invested 4-12 years ago, which is not a smart investment but a great way to get out of a business that’s about to lose what remains of its pricing power (except maybe in controlled locations

like airports

).

Comments

[nebraskaguy:]

What about Viaero wireless? Seems like they are picking up customers in the midwest..would extend range thru rural areas

2008 Nov 08 02:06 PM

[mgs in conn...:]

I find it humerous and sad that at&t continues to make these questionable business decissions. When they lose market share through attrition they feel compelled to try to recapture market lead through aquisitions. I work for this company and i have seen some terrible business decisions on behalf of the hierarchy of at&t. Please shareholders of at&t--WAKE UP!!!--this company is being run by idiots..they must remember to hold the customer first, by doing so the company will regain its stature and stock price will follow. I used to feel proud of my company but for the past 10 years--i wish that verizon would buy us. copper wire technology is dead. Unless at&t makes the investment--and i mean capitol plant investment- into fiber to the home or fiber to wireless pcs their time is extremely limited as a communication giant (ala qwest,rochesster tel,cincy bell--$3.00- $7.00 stock). SHAREHOLDERS, you have the power to demand more from at&t , you own controlling interest in this company! DEMAND that this company invest in outside plant immediately, with the potential for upgrade capability in new electronic technology--ie..softwa... conversion,DWDM,wireless line of sight multiplexing. Fiber to curb buildout is the ONLY way to be ready for the next round of new telecommuniation/broad... technology to be implemented in a timely manner. at&t must invest now, today, yesterday. Sure the price for household past is going to be considerably more than the <$100.00 it is incurring with its current u-verse service--perhaps in the neighborhood of the current FiOS build that verizon is taking on--$1300.00 per household past--but to invest now while other companies are building and have been building will incur a cost benifit through suppliers being tuned up for production already. This investment will reflect major profit in five,ten and fifteen year return on investment. Additional upgrades in the future will and can be added through the afformentioned DWDM and line of sight wireless technology. Copper wire is history-3rd world-and should be relegated to a stopgap until fiber can be engineered,placed and spliced in the field. Shareholders i implore you to make at&t implement this forward thinking now--today--unless you want to be the owner of a $3.00-$7.00 stock.

2008 Nov 11 08:23 PM

[i build fib...:]

they spent billons and billons less then verizon! Why does j d powers rate the u verse product over fios????????they are blowing their budget trying to get fiber close enough to deploy uverse!!!!!!!little lone get it to the house!!!!!The last mile may change again in the near future and wireless my turn out to be the answer(not now). But with technology changing this fast i don't think its worth the capital!!!! They needed a tv technology and this is a very good one! obviously fiber is superior, but the cost is astronomical! i'm a employee and not thrilled with our managment , but even by employing uverse your pushing fiber to the cross box! so the penetration is getting deeper!! lighten up it'll be alright!

2008 Nov 12 11:10 PM