AT&T/T-Mobile merger could hurt Nokia Siemens

While the huge potential AT&T/T-Mobile USA merger has yet to clear considerable regulatory hurdles, analysts are already speculating that Nokia Siemens Networks (NSN) could be hit hard given its status as a key vendor with T-Mobile USA.

If the go-ahead is given, then the merger would certainly impact the major infrastructure vendors. However, with T-Mobile USA being NSN's largest customer in the US, AT&T could decide to drop NSN as it works towards generating the all-important cost savings from the merged entity.

Ericsson and Alcatel-Lucent are the two largest infrastructure suppliers to AT&T, while NSN provides T-Mobile USA with equipment including standardisation services for its HSPA+ network. Critically, Nokia Siemens has had very limited success in becoming an equipment supplier to AT&T.

NSN might attempt to gain favour with AT&T management by offering new technology combined with aggressive pricing to outdo Ericsson and Alcatel-Lucent. This move, according to comment in Seeking Alpha, could backfire on NSN though by endangering its fragile profitability, and provoke further worry within AT&T.

NSN might be able to present a more encouraging picture to AT&T execs if it's able to close the much-delayed acquisition of Motorola's network division. The deal is presently bogged down in legal challenges raised by Huawei as well as a review by Chinese regulators.

But NSN has downplayed worries about the possible negative ramifications of the AT&T/T-Mobile merger, stating that it saw significant business opportunity in the US. "We believe we have a significant opportunity to help American operators deal with the unique demands of smartphones and tablets. This deal does not diminish that belief," Nokia Siemens said in a statement carried by Reuters.

For more:
- see this Seeking Alpha article
- see this Reuters article

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