AT&T looks to make a deal with DOJ on T-Mobile (report)
Reuters reports that AT&T may be willing to give up 25 percent of T-Mobile's assets to get approval from the Department of Justice.
AT&T could divest up to 25 percent of T-Mobile's assets to keep its $39 billion bid to buy the No. 4 carrier alive, news service Reuters reported today.
On Wednesday, the U.S. Department of Justice, which is owned by the German phone company Deutsche Telekom. AT&T vowed to fight the lawsuit, but sources close to the deal who didn't want to be named told Reuters that AT&T is also trying to line up more meetings with the Justice Department to work out a deal.
Officials at the Justice Department said that they would keep their door open to AT&T, but the agency.
AT&T had already been in preliminary talks with Justice Department officials before the agency filed its 22-page lawsuit. According to Reuters, AT&T had already offered to divest 10 percent of T-Mobile's assets.
AT&T declined to comment beyond a statement it put out after the Justice Department filed its lawsuit, stating the company was disappointed but planned to fight the claims in court.
A source told the news agency that AT&T was frustrated because the company felt like it was still negotiating with the regulators to close the gap on how much it would have to divest.
Sources have now told Reuters that AT&T could be willing to give up as much as 25 percent of T-Mobile's business, including valuable spectrum. But experts told the news agency that the problem with this scenario is that the company would likely have to give up both regional and national assets. While there are several companies that may buy the regional assets, the only two companies that would likely be interested in buying the national assets include Verizon Wireless and Sprint Nextel. And it's unclear if the Justice Department would accept that as part of the deal.
The federal judge who will hear the case has already been chosen. U.S. Judge Ellen Segal Huvell in Washington, D.C., was randomly chosen to preside over the case. The Reuters article notes that she has a reputation for speedy trials, which could benefit AT&T. This may put pressure on the Justice Department to find a settlement with AT&T.
But even if AT&T wins its case against the Justice Department in court or if it strikes a deal with the Justice Department, the company. The FCC must approve the transfer of wireless licenses from T-Mobile to AT&T.
The FCC said it's still reviewing the merger. While its review is separate from the Justice Department, an unnamed FCC official told the Wall Street Journal that the FCC had provided input to the Justice Department on its decision to stop the merger. The FCC, which must decide if the merger is in the public interest, has never approved a license transfer for a merger that the Justice Department had rejected, the official also said.
There are early indications that the FCC would not approve of the merger. FCC chairman Julius Genachowski said in a statement after the Justice Department filed its suit stating that his agency also had "serious concerns" about how the deal would affect competition. And Democratic FCC commissioner Michael Copps has also released a statement expressing his concerns for the deal.