AT&T fighting to save T-Mobile deal

AT&T is expected to offer some proposals to move forward with its acquisition of T-Mobile in the wake of the DOJ's attempt to block the deal.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
2 min read

AT&T is prepared to offer the government some concessions in an effort to salvage its $39 billion deal to acquire T-Mobile, according to a story out today from Reuters.

The carrier has been trying to convince federal regulators and other skeptics that a merger with T-Mobile wouldn't be anti-competitive as some claim and would in fact provide benefits to consumers.

But federal agencies scrutinizing the deal are proving a hard sell, with the Federal Communications Commission dragging its heels on a decision and the Department of Justice on Wednesday filing an antitrust lawsuit aiming to block the merger.

In response, AT&T is trying to strike a settlement before the DOJ's lawsuit goes too far, says Reuters. Details of the company's proposal were not revealed, but it would likely include promises to keep T-Mobile's inexpensive mobile plans intact and sell off certain T-Mobile assets. Specifically, sources told Reuters that AT&T might have to divest as much as 25 percent of T-Mobile's business, including its airwaves and subscribers, before the government would consider approving the merger.

But selling off such a large percentage of assets would be tricky, according to Bob Doyle, a former antitrust enforcer quoted by Reuters. The only possible buyers on a national scale would be Verizon Wireless and Sprint, but Doyle doesn't see either as a likely option as such a sale would trigger even further antitrust concerns.

Related stories:
AT&T and T-Mobile: Wireless megamerger (roundup)
DOJ's statement regarding AT&T and T-Mobile
Why the DOJ means business on AT&T and T-Mobile
What DOJ's decision means for AT&T-T-Mobile merger (FAQ)
T-Mobile sans AT&T faces big 4G gap

If AT&T can't get the deal done, however, it reportedly would be forced to pay out $6 billion in the form of a break-up fee, which would include $3 billion in cash to T-Mobile USA, and $2 billion in spectrum space and $1 billion in a "roaming agreement to T-Mobile's parent Deutsche Telekom.

Along with offering any concessions to keep the proposed merger alive, AT&T must now find a way to battle the DOJ's lawsuit, which is claiming that the deal would lead to "higher prices, poorer quality services, fewer choices, and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives."

In its response, AT&T expressed surprise at the suit, saying that it plans to ask for an "expedited hearing." The company pointed out that it's up to the DOJ to prove the "alleged anti-competitive affects" of the merger and that "we intend to vigorously contest this matter in court."

An AT&T spokeswoman told CNET that the company is not commenting on the Reuters story or any reports beyond what it said in response to the DOJ lawsuit.