According to a Thanksgiving Day announcement,
AT&T and T-Mobile’s parent company Deutsche Telekom have agreed to pullback
the application to the FCC, at least at the moment, to join
together cell phone operations. AT&T plans to charge $4 billion on
earnings to fund breakup fees for Deutche Telekom which are owed if the deal
was not consummated. This does not mean
that the companies have abandoned all future plans for a merger; rather they
are saying that it is a tactical move.
The coming February 2012 antitrust trial will showcase the Justice
Department’s case against the merger as well as a robust response by the
companies involved.
To save the merger, analysts have said that
AT&T may agree to sell T-Mobile assets, up to 40%, to rivals to mitigate
anticompetitive charges by the Justice Department. By
strengthening the competitors such as Sprint and MetroPCS, which are currently
ranked 3rd and 5th in the market, AT&T can claim that
viable competition is being preserved or enhanced. The critical question for AT&T is
whether it can sell off a significant portion of T-Mobile assets and still achieve
its goal of expanding its wireless spectrum through the acquisition. “If that is its goal, then AT&T has to
explore ways to salvage as much spectrum out of the deal as it can,” stated
Kevin Werbach, associate professor at the Wharton School of the University of
Pennsylvania and formerly with the FCC as a technology policy official.
Related Link:
http://www.nytimes.com/2011/11/28/business/atts-next-move-may-be-asset-sell-off.html