Benchmark Comments On AT&T / T-Mobile Merger (T)

AT&T T and Deutsche Telekom announced that AT&T is buying T-Mobile USA for $39 billion, Benchmark reports. “This is bad news for tower companies as it would likely lead to cell site decommissioning and possibly lower future demand, with three major wireless carriers rather than four,” Benchmark writes. “But the deal is not expected to close until 1H12 with regulators likely posing a major challenge.” Among synergies, Benchmark says that AT&T may remove cell sites on towers where both AT&T and T-Mobile have equipment. “Tower companies have yet to disclose the percentage of revenue at risk due to possible site decommissioning,” Benchmark continues. “Any possible decommissioning will come at a slow pace due to the long-term nature of tower contracts (typically 5-10 years). Decommissioning in the AT&T-Cingular combination was spread over multiple years and ended up being about half as much as originally feared.” AT&T currently trades at $28.76.