(Accedian Networks') EtherNEWS Blog

For starters, AT&T still needs more spectrum to support its Long Term Evolution network. Winning Federal Communications Commission approval to purchase spectrum from Qualcomm will help.

The spectrum covers more than 300 million people nationwide, including more than 70 million people in five of the top 15 metropolitan areas (New York, Boston, Philadelphia, Los Angeles and San Francisco) and is in the 700-MHz band service providers are using for LTE.

Deutsche Telekom, the parent of T-Mobile USA, now will be looking at other options to make liquid some of its U.S. operations, for the simple reason that it needs the cash to build out Long Term Evolution networks elsewhere.

We also should expect a new round of activity by firms looking to partner or invest in T-Mobile USA as well. Presumably those new suitors are investors who have complementary assets, such as spectrum assets that could help T-Mobile USA create an LTE network, while giving the new investors access to the skills a mobile service provider possesses.

One potential impact of the failure of the AT&T bid to buy T-Mobile USA is investor concern about whether Deutsche Telekom’s dividend could be cut. The company says the current payout will be maintained through 2012. But that only makes investors wonder what will happen afterwards. Deutsche Telekom repercussions

The problem is that DT had expected to be able to use the $39 billion in proceeds from the sale of T-Mobile USA to pay down debt and increase investment in Germany. The $3 billion break-up fee Deutsche Telekom will receive from AT&T is, of course, an order of magnitude smaller than what DT had hoped to receive.

Spending to improve T- Mobile USA’s network, which means acquiring spectrum to build a fourth-generation Long Term Evolution network, then building the network, might cost as much as $9 billion, said RBC Capital Markets analyst Jonathan Atkin.

Some investors therefore worry that T-Mobile USA could become a cash-draining problem.

And matters are not helped by the fact that Telefonica SA in December 2011 said it would be cutting its dividend. Deutsche Telekom dividend

Telefonica SA’s first dividend cut in a decade highlighted the extent to which Europe’s sovereign debt crisis has hit Spain’s largest telecommunications company. The 14-percent cut in the 2012 dividend furthermore was followed by news of a dividend cut at Telekom Austria AG.