AT&T Desperate To Save T-Mobile Bid - InformationWeek
09:57 AM
Eric Zeman
Eric Zeman
Building Security for the IoT
Nov 09, 2017
In this webcast, experts discuss the most effective approaches to securing Internet-enabled system ...Read More>>

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 In the early morning hours of Thanksgiving, AT&T announced that it had withdrawn its T-Mobile merger application from the FCC.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.)

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
User Rank: Apprentice
11/30/2011 | 2:20:47 AM
re: AT&T Desperate To Save T-Mobile Bid
It'll be a bummer for all the folks that rely on MVNO's to provide them with cheap access to wireless mobility. Like my father's SVC tracfone, it's a basic GSM phone running almost exclusively on AT&T's network. If AT&T have increased problems with their spectrum, it's highly likely that guys like tracfone won't be able to sustain the low costs of their products...anti trust backfiring in the face of a depleting resource.
Leo Regulus
Leo Regulus,
User Rank: Apprentice
11/28/2011 | 8:18:02 PM
re: AT&T Desperate To Save T-Mobile Bid
Yes, and the rest of the world is desperate for this NOT to happen.
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll