AT&T T-MOBILE MERGER Research Paper Example | Topics and Well Written Essays - 2000 words

AT&T T-MOBILE MERGER - Research Paper Example The merger, which was announced in March 2011, aims at expanding the financial soundness of the companies by increasing total sales. This paper evaluates the issues that surround the merger of the two companies. In order to evaluate the implications of the merger between the two companies, the paper will analyze the perspectives of the AT&T Company as well as the views of the government and the competitors. Telecommunication Market The US telecommunication industry is growing at a faster rate due to the high demand of the speedy services and broadband. The industry has been oligopolized by the consolidation of the telecommunication companies especially in 1990s. In order to acquire market power, telecommunication companies in US have emulated merger and acquisition resulting to a competitive edge in the local and international markets. Major mergers include Bell Atlantic and GTE in 2000, Cingular and AT&T Wireless in 2004 as well Nextel and Sprint merger of 2005. One of the major asp ects that have resulted to the success of the telecommunication industry is that it is capital intensive. For example, in 2006-2009, more that $100 billion was invested in the industry by various companies. As a result, there has been a tremendous increase in the number of cell sites. Major players in the US telecommunication market include. ... Costs and benefits of the merger from AT&T perspective One of the benefits of the merger based on AT&T perspective is that it will create 5,000 new call centers in the US market. In this way, the company depicts that the level of household income will increase as a result of creation of more employment opportunities. In order to indicate that the merger will increase services and reduce prices within the US telecommunication market, the company provided an economic model to the Federal Communications Commission (James 2). AT&T Company aims at displacing Verizon Company in the market. According to the company top level management team, the merger will reduce the congestion experienced in its network. In addition, AT&T argues that the merger will result to the economies of scale. This will be achieved since the company is a large entity and its average cost will be reduced. Other aspects of economies of scale that will emerge include technical and financial economies (Carol 46). In thi s regard, the profitability of the company will be greatly enhanced since the costs of production will be allocated among many units. In order to ensure growth of the telecommunication market in US, the company management depicts that a significant portion of revenue that will be generated which is estimated to be more than $70 billion, will be allocated to innovation. The improvement of the telecommunication technologies will not only lead to effective communication within the US but also it will generate employment opportunities and foster US economic growth (Berkowitz 25). Additionally, the merger will enable the company to face off international competitors. This will ensure that consumers enjoy quality services with low costs. As a