AT&T Prepares Fallback Position

November 28th, 2011 by · 1 Comment

According to various reports, AT&T (NYSE:T, news, filings) is considering the possibility of divesting up to 40% of T-Mobile USA in an effort to salvage its intended acquisition following the FCC's decision to pile on. It would be an expected yet bold revision to the original deal, but honestly I rather doubt it's going to work.

Rumors of possible talks with a wide selection of the company's wireless competitors have cropped up throughout the fall season, and of course some sort of divestments were always certain to be part of any approval anyway.  But 40% would be a big chunk, and AT&T apparently hopes this may assuage regulators fears that competition will be damaged.  What they really want, they say, is the spectrum with which to compete in years to come.

But the FCC and DOJ haven't zeroed in on particular markets where the merger may upset the competitive balance. Rather, it's the entire concept of T-Mo being gone and AT&T being substantially bigger that is what is worrying them.  Add in the fact that this is an election year, which will harden positions across the board, and the path ahead for AT&T's purchase of T-Mobile USA is decidedly uphill even with such offers to divest vast swaths of the company.

Yet one should never underestimate the power of AT&T's lobbying and legal teams, and if they can drum up enough interest from the likes of MetroPCS, America Movil, Leap, and yes even Sprint... Yes, it could happen.  But I have to ask, might these potential buyers find it more attractive to wait for the deal to collapse and then pick up the pieces later when DT explores such alternatives of its own?

Categories: Government Regulations · Mergers and Acquisitions · Wireless

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  • Carlk says:

    Yes, that comment did belong here. Thanks Rob. Thus far, the DOJ and FCC representing the linchpin agencies for telecom merger approvals have acted in their citizens’ best interests while deserving great applause.

    However, it would be a shame to see them cow tow to this monopolist while giving them the option of becoming the “broker of record” to peel off additional assets of TMobile then they would have be willing to divest otherwise, in order to make this deal more palatable, and salvaging a break up fee which some are touting at $7B.

    Their owners should fall onto their own swords representative of the hubris by their management team, especially their CEO who should have sent his resignation letter already!

    With Barney Frank giving up his political post inside the Halls of Congress today, maybe REAL CHANGE is upon us, and the U.S. Govt. will tell this monopolist who has been robbing citizens for too many decades now, to go fly a kite and by serendipity might discover a new form of electricity which they can overcharge the public for instead.

    Robert, did I decipher this enough for you? 🙂

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