One company acquiring another company can be a very good thing for customers, shareholders, and management. In the past ten years IBM has made nearly 50 acquisitions that have allowed it to broaden and deepen its Websphere middleware for the Internet. There have been numerous financial services companies that have used mergers as a way to increase their asset base and at the same time become more efficient. The key thing to enable a merger to result in better service to it’s customers is how quickly and completely they can integrate.
In the case of the telecommunications industry mega-mergers, I am not as confident of the value created, especially for customers. These mergers, although they may have enriched management, have so far done little for customers and in some cases have actually hurt customers. For example, since Cingular acquired AT&T wireless I have seen problem after problem.
AT&T Wireless was doing a reasonable job for me both domestically and in other parts of the world where I travel. A few weeks ago, however, the local signal strength in Connecticut deteriorated to an unusable level. After many long and painful conversations with Cingular call centers, I learned that the problem is that Cingular has “upgraded” the former AT&T cell towers. In that case, upgrade means that it has been changed to Cingular which means it no longer works with the AT&T phone. There was no notice to customers and I was told the only way to solve the problem was to replace the phone. End of dictation.
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Update Apr. 16, 2013: Cingular is now owned by AT&T