AT&T plans to argue that the merger with T-Mobile is a good idea because of efficiencies.
AT&T and its vast legal team met with the Department of Justice Wednesday to discuss AT&T's proposed acquisition of T-Mobile. Rather than ask for the lawsuit to be summarily dismissed, AT&T said it wanted a trial. The judge selected February 13, 2012.
What argument will AT&T use to convince the government that its T-Mobile merger is a good idea? Efficiencies.
"Efficiencies will be the core of the debate in court," said AT&T CEO Randall Stephenson, speaking at an investor conference. "It's an industry where efficiencies are critical to keeping prices in check."
AT&T should be able to take the combined AT&T and T-Mobile entity and make it a more efficient business and achieve economies of scale that allow it to pass down savings to consumers, right? The trouble is, that's not what happened when AT&T and Cingular merged back in 2007. The two companies were so ineptly merged that problems persisted for years.
Beyond that, AT&T accused the Justice Department of not coming "to grips with the significant efficiencies this transaction will generate." But which efficiencies is AT&T talking about?
One way to look at "efficiencies" would be to say that the merged companies would eliminate redundancies, such as marketing departments, accounting departments, and so on. In other words, they'd cut jobs that are duplicated across both companies to reduce costs. That's normal M&A behavior.
Other synergies? Cutting down on the number of outside suppliers and focusing on core partners. That sounds good for a lucky few, but not the industry at large.
AT&T has not previously played the "efficiencies" card. Instead, AT&T claims it will bring 5,000 jobs back to the U.S. Adding 5,000 jobs, as good as that sounds in today's economic climate, hardly smacks of efficiencies.
The judge overseeing the case has set aside six weeks to hear arguments from AT&T and the Department of Justice. The DOJ believes the merger will reduce consumer choice and raise consumer prices. Others, such as Cellular South and Sprint, agree. They've filed their own lawsuits. And seven states have piled onto the DOJ's lawsuit against AT&T.
Attend Enterprise 2.0 Santa Clara, Nov. 14-17, 2011, and learn how to drive business value with collaboration, with an emphasis on how real customers are using social software to enable more productive workforces and to be more responsive and engaged with customers and business partners. Register today and save 30% off conference passes, or get a free expo pass with priority code CPHCES02. Find out more and register.
InformationWeek Elite 100Our data shows these innovators using digital technology in two key areas: providing better products and cutting costs. Almost half of them expect to introduce a new IT-led product this year, and 46% are using technology to make business processes more efficient.
The UC Infrastructure TrapWorries about subpar networks tanking unified communications programs could be valid: Thirty-one percent of respondents have rolled capabilities out to less than 10% of users vs. 21% delivering UC to 76% or more. Is low uptake a result of strained infrastructures delivering poor performance?
Join us for a roundup of the top stories on InformationWeek.com for the week of December 14, 2014. Be here for the show and for the incredible Friday Afternoon Conversation that runs beside the program.