Merger Salvage Plan by AT&T

Posted by Sam Churchill on

Reuters says AT&T will soon present a propose a two part solution to the DOJ to salvage its planned $39 billion merger with T-Mobile USA.

Even as AT&T gears up for a lengthy court battle against the Justice Department, AT&T is prepared to make concessions to address concerns that the T-Mobile deal is anti-competitive and could cause wireless prices to rise.

This two-track plan will allow AT&T to try to find a settlement before the lawsuit reaches the court.

“AT&T is pretty determined that they can find a solution, and they are pretty confident,” one of the sources said, requesting anonymity as the talks are private.

Details of AT&T’s proposed settlement were not available, but it is expected to include pledges to maintain T-Mobile’s relatively cheap mobile subscription plans, and asset sales.

AT&T may have to sell up to 25 percent of T-Mobile’s business, including airwaves and customers, two sources said, to address the government’s concern that just three companies would control 90 percent of the U.S. wireless market if the merger goes through.

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 must still get approval from the Federal Communications Commission, points out C/Net.

FCC Chairman Julius Genachowski said this week, “Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition.”

The Justice Department said that the proposed $39 billion transaction would substantially lessen competition for mobile wireless telecommunications services across the United States. Deputy Attorney General James Cole said the merger would result in 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.

The DOJ’s complaint (pdf, 25 pages), was filed Wednesday in federal court.

Light Reading explores What AT&T Loses Without T-Mobile. That would be about $6B in forfeit fees. T-Mobile gets $39B divided by 34M customers or $1,147/head.

Some spectrum has been languishing at the FCC for years. That includes the AWS-3 spectrum at 2155-2175 MHz, H block spectrum at 1915-1920 MHz and 1995-2000 MHz and J block spectrum at 2020-2025 MHz and 2175-2180 MHz, and the 700 MHz D block at 758-763 MHz and 788-793 MHz.

T-Mobile USA has lots of options. T-Mobile and Dish could merge their AWS and satellite frequencies CREATING 4G spectrum. Dish owns 40 MHz of spectrum from ICO and TerreStar. T-Mobile could also buy 25MHz of AWS-3 spectrum and the 19 MHz of AWS owned by cable operators. Microsoft, Google, Apple, Amazon and media conglomerates might chip in $1B each on such an enterprise. Combined with an AT&T settlement, that could total over $10B in cash.

T-Mobile could be a 4G king-maker — with 80-100 Mhz of ideal 2GHz/AWS spectrum.

What’s AT&T got? Not much.

AT&T offered T-Mobile a suitcase full of cash. Some might characterize it as hush money.

Related Dailywireless articles include; DOJ Blocking AT&T/T-Mobile Merger, AT&T Merger: More Heat, AT&T Merger: Yea & Ney, FCC Receives Pro & Con Support for ATT Merger, LTE Spectrum: It’s War , Spectrum Drama: Made for TV, AT&T MediaFLO Spectrum: More Review, T-Mobile Cuts Prices, FCC: Show Us Your Spectrum Scarcity, AT&T, Combining AWS and 700 MHz: Why?, Comparing Data Plans, ATT Announces First LTE Modems, T-Mobile Goes to 42 Mbps, AT&T Declares Spontaneous “4G” Transformation, More U.S. LTE Cities July 21, T-Mobile Makes Its (4G) Move , Multicarrier HSPA, WiMAX – Release 2.0 T-Mobile: LTE in the Future?, Multicarrier HSPA, FCC: Spectrum for Sale, AT&T Data Caps Extend to Femtocells, AT&T’s New Data Plans, T-Mobile: Now HSPA+ Coverage for 75M, Public Safety: Show Us The Money, Clear: No Limits, FCC to Okay $2.3B AT&T Deal, Cellcos: One Thing – Bandwidth

Posted by Sam Churchill on Friday, September 2nd, 2011 at 12:58 pm .

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