AT&T Looking to Buy Leap? Vonage? Are you kidding?

September 3rd, 2009 by · 2 Comments

A twin pair of rumors hit the street yesterday, both of which seem to be living proof of the phrase “There’s a sucker born every minute”.  First, there was this insane notion that AT&T (NYSE:T, news, filings) might buy Vonage (NYSE:VG, news, filings).  Right, that’s why they spent years choking off their own CallVantage VoIP product – so they could attract regulatory scrutiny by buying another one, cannibalize their own revenue with it, and further piss off the rather significant percentage of Vonage customers who are Vonage customers precisely because they don’t want to be AT&T customers.   Yeesh…

The second rumor is a bit more believable, that AT&T might buy Leap Wireless (NASDAQ:LEAP, news, filings).  I suppose that’s theoretically possible, but it still doesn’t make any sense.  Leap is a CDMA shop, AT&T is GSM – they don’t fix that incompatability until LTE is here and AT&T has enough on its hands upgrading to LTE at this point.  Further, doesn’t everyone get the feeling that the FCC or DOJ or someone out there in the Obama administration is just itching to slap down a mega-merger and remind Ma Bell who is in charge?  For AT&T to try any substantial merger now would be just asking for trouble, and they’re smart enough to know that. 

The market sure does seem jumpy at the moment, like it really wants something interesting to happen.  Otherwise these rumors wouldn’t spread.

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Categories: Mergers and Acquisitions · VoIP · Wireless

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2 Comments So Far

  • Tom Fraser says:

    I can’t believe that all of you missed the most substantial reason for the jump in the interest of Vonage stock! China, India, and every other emerging market country is excited about worldwide long distance for one flat rate of $24.99. As Americans we have such an ignorant knowledge of numbers of citizens in other countries it is almost funny. While we report an average of 350 million people living, breathing and making phone calls within our borders, countries like China and India boast 10 times that number of citizens. Read the blogs . . . they are excited that they can speak to relatives around the world for a low monthly fee without additional charges. No one has even mentioned the impact this could have on businesses operating worldwide who incur huge monthly long distance bills through AT&T. Basically, who cares about the Apple IPhone application right now, it’s in the works and will eventually be News rather than a rumor.

  • ed says:

    Regarding ATT & Leap. Remember that Leap has tons of unused AWS capacity which it bought in Auction 58 and 66 to help alleviate its 3G chokehold with the iphone data usage.

    Further, using CDMA as a prepaid offering also gives them a strong foothold in the prepaid market without diluting the AT&T brand. It makes alot of sense esp when leap is trading at such cheap valuations…

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