AT&T Desperate To Save T-Mobile Bid - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Mobile
Commentary
11/28/2011
09:57 AM
Eric Zeman
Eric Zeman
Commentary
50%
50%

AT&T Desperate To Save T-Mobile Bid

AT&T appears to be willing to do anything to salvage its plan to acquire T-Mobile USA, despite the roadblocks being thrown in its way by the government.

Over the holiday weekend AT&T tried pull a fast one on the Federal Communications Commission, it would seem. In the early morning hours of Thanksgiving, AT&T announced that it had withdrawn its T-Mobile merger application from the FCC. The merger application requests that T-Mobile USA's licenses to operate and spectrum holdings be transferred to AT&T.

AT&T and Deutsche Telekom said they will instead focus on winning the lawsuit levied against them by the Department of Justice.

"AT&T and Deutsche Telekom are continuing to pursue the sale of Deutsche Telekom's U.S. wireless assets to AT&T and are taking this step to facilitate the consideration of all options at the FCC and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice, either through the litigation pending before the United States District Court for the District of Columbia, or alternate means," said the companies in a press statement.

[ Android devices dominate the smartphone market, despite spotty security. See Android Buyer Beware: 12 Least Secure Phones. ]

In the same press release, however, AT&T said that it is going to take a $4 billion charge in the fourth quarter of the year. Why is it writing down that much money? It is preparing for the breakup fee it will have to pay Deutsche Telekom / T-Mobile USA if the deal falls apart, which amounts to about $6 billion in cash and spectrum assets.

AT&T insists that the move is being made so that the company can regroup and resubmit a new proposal. AT&T says that it filed this paperwork with the FCC before the FCC said it would refer the matter to an administrative law judge. The FCC sees the paperwork withdrawal as a "request" that it "will consider."

On Friday, AT&T's legal team bristled at the FCC's response.

"We have every right to withdraw our merger from the FCC, and the FCC has no right to stop us," said AT&T general counsel Wayne Watts in a statement. "Any suggestion the agency might do otherwise would be an abuse of procedure which we would immediately challenge in court."

AT&T believes that by withdrawing its paperwork, it preempts the FCC's attempt to send the merger paperwork before a judge. Is there something in that paperwork that AT&T doesn't want to become public? It would seem so.

It would also seem that AT&T is willing to make some major concessions in order to make the deal go through. Speaking to Bloomberg, a source cited as "familiar with AT&T's plans" suggests that AT&T would be willing to divest up to 40% of T-Mobile USA assets in order to help the deal gain regulatory approval.

While divestitures are part-and-parcel for acquisitions in the telecom space, it doesn't make much sense in this case. AT&T has stated repeatedly that it is making this acquisition to gain T-Mobile USA's spectrum assets. AT&T said that it won't be able to expand its LTE network to cover 97% of Americans (as planned) without T-Mobile's spectrum.

How is that going to work if it only buys 60% of T-Mobile?

AT&T is desperate, and it is showing.

Apply advanced analytics to the sales pipeline, Web traffic, and social buzz to anticipate what’s coming, instead of just looking at the past. Also in the new, all-digital issue of InformationWeek: A practical guide to biometrics. Download the issue now. (Free registration required.)

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

News
Remote Work Tops SF, NYC for Most High-Paying Job Openings
Jessica Davis, Senior Editor, Enterprise Apps,  7/20/2021
Slideshows
Blockchain Gets Real Across Industries
Lisa Morgan, Freelance Writer,  7/22/2021
Commentary
Seeking a Competitive Edge vs. Chasing Savings in the Cloud
Joao-Pierre S. Ruth, Senior Writer,  7/19/2021
White Papers
Register for InformationWeek Newsletters
2021 State of ITOps and SecOps Report
2021 State of ITOps and SecOps Report
This new report from InformationWeek explores what we've learned over the past year, critical trends around ITOps and SecOps, and where leaders are focusing their time and efforts to support a growing digital economy. Download it today!
Video
Current Issue
Monitoring Critical Cloud Workloads Report
In this report, our experts will discuss how to advance your ability to monitor critical workloads as they move about the various cloud platforms in your company.
Slideshows
Flash Poll