AT&T, T-Mobile: There’s No Crying in Mergers

AT&T has decided not to challenge the Federal Communication Commission’s objections to its proposed US$39 billion acquisition of T-Mobile. Given the energy, time and resources it clearly put into the effort, the company is likely still licking its wounds, but it will soon have to address the question of what to do next — as will T-Mobile and its parent company Deutsche Telekom.

The proposed deal was seen as the solution to several problems: how AT&T could extend services throughout the U.S., despite its constrained bandwidth; how T-Mobile could survive in a market where it’s a distant No. 4; and how Deutsche Telekom, T-Mobile’s parent, could finally exit the U.S.

New Questions Pending

The deal may be dead, but the problems it was meant to solve are very much alive.

In certain respects, the companies’ positions have worsened. Deutsche Telekom wasted several months as it waited to see how the proposal would play out. Ditto for AT&T, which could have been exploring other alternatives. Instead, it must now pay DT about $4 billion in a breakup fee.

T-Mobile, for its part, is still grappling with the issue of how to compete from its low perch in the market — backed by a reluctant parent to boot.

Sprint Waits on the Sidelines

Indeed, T-Mobile’s weakened state opens interesting possibilities for Sprint-Nextel, which had strongly opposed the transaction. There has been talk, for example, of a joint venture or partnership. Other possible partners include the Dish Network.

Or something more permanent than a partnership could be undertaken, suggested Boston University antitrust law professor Keith Hylton.

“It would be hilarious — to everyone but AT&T — if T-Mobile were to sell itself to Sprint, the firm that lobbied hardest to block the deal with AT&T,” he told the E-Commerce Times. “It would be a fine illustration of the benefits of lobbying to prevent your rivals from merging.”

Sprint would be in a position to pay a very low price for the acquisition, since rival firms could not compete in the bidding process without bringing on another merger challenge, he noted. Sprint would suddenly find that all of the monopolization issues it raised in lobbying against the AT&T acquisition had somehow vanished.

Capacity Issues

As for AT&T and T-Mobile, they are facing serious capacity issues, Chris Koopmans, chief operating officer at Bytemobile, told the E-Commerce Times.

They also must keep their respective tech-savvy user bases happy, which will not be easy, he said.

“AT&T has a large iPhone demographic — very demanding, performance-sensitive users — and a ton of capacity to support,” said Koopmans. “They need all the capacity they can get. T-Mobile has a large Android demographic with a heavy young subscriber population driving a lot of network traffic.”

In the current market environment, operators win and lose subscribers based on the quality of their data service, he said, and when they can no longer rely on exclusive access to hot devices, “they will have to rely on the performance of their network to carry the day.”

A Network Sharing Option

The two operators will have a roaming agreement, “but beyond that, they could consider network sharing of their fourth-generation LTE networks,” Azita Arvani of the Arvani Group told the E-Commerce Times. “The big issue for both AT&T and T-Mobile is where they are going to get additional spectrum to properly roll out their next-generation LTE networks.”

Verizon has limited the two companies’ options by its recent acquisition of spectrum from SpectrumCo, a joint venture between Comcast, Time Warner Cable, and Bright House, she said.

“AT&T will push harder to get the MediaFLO spectrum from Qualcomm, and T-Mobile will seriously consider other spectrum partners, such as Dish Networks,” according to Arvani.

However, if they opt for network-sharing with their fourth-generation LTE networks, they could create one LTE network — with one set of costs and spectrum that both operators can use, she pointed out. “Network sharing has been done in Europe, but not so much in the U.S. yet.”

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Intuit’s $12B Mailchimp Purchase Breathes New Life Into Email Marketing

Intuit on Monday announced an agreement to acquire Mailchimp, a global customer engagement and marketing platform for small and mid-market businesses, for $12 billion in cash and stock advances. The purchase could be the linchpin that thrusts the mostly financial software company into solving more fertile mid-market business challenges for its customers.

The planned acquisition is part of Intuit’s mission to become an AI-driven expert platform. With the acquisition of Mailchimp, Intuit will accelerate two of its previously-shared strategic big bets: to become the center of small business growth and to disrupt the small business mid-market, said the company in its announcement.

Intuit’s acquisition of Mailchimp sends a great message to all entrepreneurs around the globe that venture capital is not always necessary, observed Michael Kawula, co-founder of CBA, a marketing agency for YouTube monetization. Mailchimp is a bootstrapped success story that has not raised any outside venture capital.

“This is a very clever growth strategy for Intuit, who wants to get in front of SMBs, which is difficult and expensive. Similar to HubSpot’s recent purchase of The Hustle newsletter, a much smaller acquisition, this also is brilliant,” he told the E-Commerce Times.

The acquisition marks a significant impact in industry, according to Osiris Parikh, sales marketing manager at Lilius. He also sees the deal as another reminder that email marketing is not dead — and data is power.

“Intuit has made a strong move to broaden its portfolio and become a leader in catering to the needs of SMBs. It is also a great story of success during Covid-19,” he told the E-Commerce Times.

Deal Basics

Intuit provides a global technology platform that makes TurboTax, QuickBooks, Mint, and Credit Karma. Intuit and Mailchimp will offer an innovative, end-to-end customer growth platform that allows customers to get their business online. It will also enable them to manage marketing, customer relationships, payment processes, and access insights and analytics, along with optimizing their cash flow and staying compliant with experts at their fingertips, according to Intuit.

Key to this process is Intuit’s ability to enable businesses to combine their customer data from Mailchimp and QuickBooks’ purchase data to get the actionable insights they need to grow and run their businesses with confidence.

“We’re focused on powering prosperity around the world for consumers and small businesses. Together, Mailchimp and QuickBooks will help solve small and mid-market businesses’ biggest barriers to growth, getting and retaining customers,” said Sasan Goodarzi, CEO of Intuit.

Mailchimp brings to Intuit technology at scale along with global customer reach.

Founded in Atlanta, in 2001, Mailchimp began by offering email marketing solutions. The company evolved into offering customer engagement and marketing automation processes fueled by an AI-driven technology stack. Mailchimp’s data and technology spans 70 billion contacts and more than 250 rich partner integrations. Its AI-powered automation at scale fuels 2.2 million daily predictions.

“Over the past two decades, we have vastly expanded and evolved Mailchimp’s platform to help millions of small businesses around the world start and grow,” said Ben Chestnut, CEO and co-founder of Mailchimp.

Why Mailchimp’s Worth It

While the email marketing sector is pretty crowded, Mailchimp stands out in terms of size and scope. The company reportedly has 13 million total global users, 2.4 million active monthly users, and 800,000 paid customers, noted Charles King, principal analyst at Pund-IT.

“Plus, half of its customers are outside of the U.S. Additionally, while people tend to focus on the mass/might of large enterprises, small businesses are really the heart and soul of most economies,” he told the E-Commerce Times.

The acquisition likely represents a lucrative opportunity for Intuit to integrate Mailchimp data with QuickBooks and provide greater analytical capabilities to customers. The synthesis of financial and marketing data in this case provides valuable and actionable insights about an organization’s clients, added Lilus’ Parikh.

“It’s also a great diversification of offerings to centralize SMB operations through one platform and benefit from Mailchimp’s established user base,” he said.

Another supporting factor for Intuit’s interest in Mailchimp is the renewed stature of email, according to Elice Max, co-owner of EMUCoupon and someone who has been involved in online marketing for eight years.

“Email marketing has made a comeback in recent years. With increased digitization caused by the pandemic, all digital mediums including email have gained a renewed importance,” she told the E-Commerce Times.

Email Marketing’s Resurgence

Technology giants are looking to build more integrated and holistic solutions. Microsoft recently bought Clipchamp, a video production tool. Both companies are looking to build platforms for the new tech-savvy SMBs, Max Suggested.

“More than anything, it means a renewed confidence in the field. Experts have been talking about the death of email marketing for a while now. But a $12 billion acquisition by a big player like Intuit means email promotion is alive and kicking,” she said.

Another factor is Intuit keeping its eye on the ball. It is important to remember the significance of Mailchimp as the pioneer in marketing automation and email marketing in particular.

“Intuit is looking to make a statement that it wants to become more than a financial software company,” Max observed.

QuickBooks Synergies

One of the motivations that lies behind Intuit’s purchase of Mailchimp is its desire to lead a revolution in the CRM capabilities of SMBs, according to Will Ward, CEO of Translation Equipment HQ . Think about the effect the pandemic has had on the popularity of remote work and the amount of remote SMBs being established.

“You would expect there to be a lot of growth potential here in the next few years. With Mailchimp and QuickBooks, Intuit is providing an end-to-end customer growth platform, and with around $20 billion invested already its belief in SMBs is evident,” Ward told the E-Commerce Times.

Like any other system that handles transactions such as orders and payments, you need to work closer to the actual customer channels. With the Intuit e-commerce product, launched about a year ago, this seems like a natural step by adding marketing automation and reaching out with its e-commerce offering to the MailChimp customer base, suggested Johan Liljeros, general manager and senior commerce advisor, North America for Avensia.

“The acquisition has added synergies between the platforms while still being able to operate as independent platforms. Looking at Intuit’s offerings, it appears they are moving towards expanding [into] digital transactional experience,” he told the E-Commerce Times.

Final Thoughts

Email marketers should be ready for disruption along with other business services providers. Intuit has been both savvy and aggressive in the way it built its business, effectively becoming the 800-pound gorilla of small business accounting and tax solutions, according to Pund-IT’s King.

“With that kind of ally behind Mailchimp, life is going to become a whole lot more ‘interesting’ for other email marketers,” he predicted.

The Intuit-Mailchimp deal should offer Intuit customers significant benefits, such as new solutions and services for bolstering their businesses. At the same time, the deal highlights the fact that old technologies can continue to be vital and dynamic.

“For years, many have claimed that email is dead or dying and quickly being replaced by whatever the tech du jour happens to be. Mailchimp — and now Intuit — beg to differ,” King quipped.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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