If you follow the telecommunications space at all, you are aware of the giant potential merger between AT&T and Time Warner. For those who need a refresher: AT&T has reached an $84.5 billion deal to buy Time Warner. Naturally, a merger of that size is raising eyebrows across the nation, from Wall Street to President-elect Trump. However, the merger is not finalized until it has been approved by government entities like the Department of Justice and the Federal Communications Commission (FCC).
Those who are in favor of the merger insist that this will result in two things. First, that the merger will allow the telecom titan to focus on innovating new kinds of content; a theme that AT&T has been touting even before rumors of the merger began to surface. Second, this merger could allow the company to present a practical alternative to cable when the AT&T wireless infrastructure is upgraded to 5G.
Those who are against the merger argue that this large of a telecommunications company would control so much of the market that they would be able to artificially increase prices. Essentially, a merger of this size could create a monopoly in the market which, as history has shown, is never advantageous for the consumer.
There are also reasonable apprehensions about how AT&T will address consumer privacy concerns regarding their treatment of customer data. This merger would allow AT&T to track more data on more devices than ever before, which naturally raises questions about how they plan to protect that data.
The FCC has yet to weigh in on the merger and will likely wait until the specifics of the deal are finalized. The deal is expected to close by the end of 2017. Keep in mind that the Justice Department is also analyzing the deal for any antitrust issues, and they to get stop the merger in its tracks if their findings give them any pause.
In the meantime, AT&T and Time Warner are moving the deal forward as quickly as they can. They have called a shareholders meeting for February 15th, 2017. In order for the merger to continue Time Warner shareholders, with a majority of outstanding common stock, need to vote to approve it. The Time Warner board unanimously suggested that shareholders approve the merger.
A merger of this size will have massive implications for the telecommunications space regardless of how it unfolds. This is an important story to watch and February will show us what the next step forward will be.
Sources:
