Investopedia: The Equipment Fallout From The AT&T / T-Mobile Deal

Mergers always stir the pot, and it is not just for the employees and customers involved in the deal. Vendors also see significant turbulence in the wake of industry consolidation. With AT&T (NYSE:T) announcing its intention to acquire T-Mobile, there will almost certainly be some changes in the telecomm equipment space. 

These two companies spent nearly $11 billion combined on capital expenditures in 2010 - close to half of the North American total. It seems unlikely that AT&T's ongoing spending needs will be as simple as "one plus one" in the future, as the company will likely see some benefit of scale and elimination of redundancies. In other words, by AT&T getting larger, the total opportunity for telecomm equipment vendors may get a bit smaller.

AT&T's Suppliers
To a certain extent, AT&T's capital expenditure plans are not going to radically change with the addition of T-Mobile. The company will continue to roll out its 4G network and will not be supporting or operating the T-Mobile network as a separate unit. That said, with more customers now under its umbrella, it stands to reason that AT&T will have to increase its overall capital expenditures (though again, not as much as simply adding T-Mobile's prior spending might suggest).

Alcatel Lucent (NYSE:ALU) and Ericsson (Nasdaq:ERIC) are two of AT&T's largest equipment vendors and there is no reason to expect this to change. More to the point, these two companies have each won about half of AT&T's 4G build orders and a larger AT&T should translate into larger overall orders. 


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