If you were Verizon CEO Ivan Seidenberg, faced with suddenly becoming the number two mobile phone company in America following an AT&T/T-Mobile merger, what would you do? You could try to buy Sprint, and for all I know Seidenberg will do just that. You could make a counter-offer for T-Mobile, but that would just be too darned expensive. If I was Seidenberg, though, I would try to poach customers — millions of customers — from T-Mobile.
AT&T is paying $1300 per T-Mobile subscriber and by the time the deal is finished extra costs will probably raise that to $1400 or more. Were I Seidenberg, then, I’d spend right up to that level to snag customers from T-Mobile. Anything under $1300 is a bargain.
At a minimum, I’d match or beat whatever those T-Mobile customers are paying per month now, I’d cover their cancellation fees, and I’d replace all their phones for nothing. Got a smart phone? Have an iPhone 4! But why stop there? Have a feature phone? Have an iPhone 4! Or Android or Blackberry or Windows Phone — whatever you like.
All smartphones all the time at Verizon!
Then watch five million or more T-Mobile customers defect to Verizon, raising AT&T’s per-subscriber cost by $300, pushing break-even on the deal to 2016.
But hey that’s just me. Maybe Ivan’s a pussycat.