AT&T may sell up to 25% of T-Mobile to get the deal approved

AT&T may sell up to 25% of T-Mobile to get the deal approved
With the Department of Justice promising to use an injunction to block AT&T's planned $39 billion acquisition of T-Mobile as we reported, Reuters is reporting that AT&T is planning on trying to settle with the government before the case reaches the court. The carrier is said to be working on a two-pronged offer to present to the DOJ, and feels confident about it, according to one source for Reuters.

During settlement talks, AT&T is expected to promise the DOJ that it would keep the relatively lower priced mobile plans offered by T-Mobile. In addition, the company would sell 25% of T-Mobile's assets. AT&T does have an incentive to work something out because if the deal fails to close, the terms of the acquisition call for $6 billion in cash and assets to be paid to T-Mobile's German parent Deutsche Telekom.

The government is concerned that if the deal goes through as currently proposed, 3 companies would control 90% of the cellular industry in the U.S.with AT&T leapfrogging over current leader Verizon. But even an asset sale by AT&T might not help sway the DOJ because only Verizon and Sprint, the nation's third largest carrier, could want to and afford to buy such a large chunk of T-Mobile. Both of those companies are already big enough that a purchase of a quarter of T-Mobile could trigger anti-trust investigations of that transaction, which would ruin the whole idea behind the divestment by AT&T.

As far as the court case that AT&T is eager to start against the DOJ,
U.S. District Judge Ellen Segal Huvelle in Washington, D.C was chosen at random. She is known to work quickly, a point in favor of the carrier which has asked for an expedited hearing. Experts say that a trial could start in two months unless AT&T is successful with its settlement offer.

source: Reuters

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