T-Mobile dealers face uncertain future in light of AT&T deal

Many T-Mobile USA dealers are feeling pressure from AT&T's (NYSE:T) proposed $39 billion purchase of T-Mobile USA.

According to a report in the Wall Street Journal, some T-Mobile dealers plan to exit the industry or scale back expansion plans as regulators weigh whether to approve the deal. According to an analysis conducted for the Journal by real-estate research firm CoStar Group, 41 percent of AT&T's stores have at least one T-Mobile store no more than a mile away, and the biggest overlap is in the West.

T-Mobile has 2,000 company-owned stores and 1,100 branded dealer stores, compared to AT&T's 2,300 company-owned locations and 3,800 independent dealer locations. AT&T executives have said they expect the deal to produce cost synergies on retail stores, marketing and back-office staff as a result of the deal, but have not said how many dealers might be axed. The uncertainty comes as T-Mobile is struggling to hold onto subscribers. The company lost 99,000 net subscribers in the first quarter, including a net postpaid subscriber loss of 471,000.

"We value our independent dealers, which have 3,800 independent retail locations. They contribute to our success," AT&T said in a statement. "We look forward to working with the T-Mobile independent dealer retailers in a manner that is mutually beneficial."

A T-Mobile spokeswoman declined to comment on what will happen to dealers if the transaction is approved, but said the carrier plans to open 200 branded partner locations this year. The report noted that T-Mobile has offered to sign the lease of new stores.

"Since the AT&T acquisition announcement, we have changed some of the tactics and investments to support our dealers as they open new stores, just as we have adjusted our tactics in the past based on other market conditions," the T-Mobile spokeswoman said. "Before the acquisition announcement we invested alongside our business partners, as they set-up operations, and we continue to make this commitment to invest with them to set-up our partners for success going forward." 

Additionally, it appears that decisions on which stores to save and which to close will be based on individual store performance.
"Any business is going to look at their portfolio of assets and say, 'Boy, what are the ones with the highest returns and the highest value?'" Doug Chartier, T-Mobile's senior vice president for national accounts and business sales, told the Journal.

For more:
- see this WSJ article (sub. req.)

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MetroPCS argues against AT&T/T-Mobile deal, but offers conditions
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Article updated June 23 with comment from T-Mobile.

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