AT&T to buy Wi-Fi partner Wayport

The recession is starting to hit telecom vendors, but so far it hasn’t put a crimp in the major telcos M&A efforts. With Verizon set to close on Alltel, AT&T has announced its plan to buy Wayport, a U.S. Wi-Fi provider, for US$275 in cash (see: Wi-Fi hits the hot spot).

Already an AT&T Wi-Fi partner, Wayport brings its national network of Wi-Fi hotspot connectivity and enterprise portfolio to the table, and a footprint consisting of high-end business access points in locations such as select Wyndham, Marriot Vacation Club and Four Seasons hotels; HealthSouth and Sun Healthcare locations, as well as the McDonald’s restaurant chain.

If the deal goes through, AT&T’s domestic Wi-Fi footprint would jump to almost 20,000 hotspots, and a total of 80,000 locations worldwide. AT&T expects its premier global brand, market presence and well-heeled enterprise sales team will be the perfect match with Wayport’s core competence in enabling and managing applications over an integrated network, and will bring in Wi-Fi customers in major verticals where AT&T does not currently have a major presence, such as the hospitality, health care, education and retail sectors.

“Wayport had already begun marketing location-aware services to the hospitality and healthcare industries,” said Stan Schatt, vice president of ABI Research. “Whether it’s instant check-in at a Wyndham resort or location tracking of expensive equipment at hospitals, applications will place business customers in golden handcuffs that they won’t really want to remove even if a competitor offers a less expensive subscription rate. Wayport has the expertise to reduce AT&T’s churn, and that makes the acquisition money well spent.”

“We’re seeing exponential growth of Wi-Fi enabled devices—such as smartphones—combined with a continued dependency on 24/7, anytime, anywhere Internet access across business and consumer market segments,” said John Stankey, president and CEO, AT&T Operations, in a statement…By acquiring Wayport, we’re giving consumers more ways to stay in touch and building a more robust network management solution for businesses.”

Stankey also stressed the importance of convergent services that combine Wi-Fi, wireless and IP networks, with a global reach. Increasingly, those services are delivered by Wi-Fi-enabled devices, which are selling in high quantity, with 300 million shipped last year and 1 billion expected to be sold in 2012.

Wayport, which already provides AT&T with back-end application management, will also contribute a separate network infrastructure that runs parallel to AT&T’s other 3G networks, already nearing the saturation point. Offloading Wi-Fi traffic from its 3G network gives AT&T much more headroom to grow overall capacity. And the Wi-Fi traffic load is sure to go up, not just because of demand, but also due to AT&T’s decision to make Wi-Fi free for the RIM BlackBerry Bold; similar offers appear to be pending for additional Wi-Fi-enabled devices.

“…Wayport has moved beyond simply providing Wi-Fi service to actively supporting key enterprise applications,” Schatt continued. “The bottom line is that AT&T Mobility’s growth on the business side will come from being so deeply tied to customers’ business applications that companies won’t easily be able to extract themselves and embrace a competitor such as Verizon. On the consumer side, the exponential increase in AT&T hotspots to around 20,000 domestically and 80,000 globally, coupled with AT&T’s recent announcement of free Wi-Fi hotspot service for its wireless customers means that consumers will assess the ubiquity of AT&T’s Wi-Fi hotspot service as a tremendous value-add to their monthly wireless subscriptions, resulting in reduced churn.”

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