AT&T would divest more T-Mobile assets to make merger work

AT&T would divest more T-Mobile assets to make merger work
The AT&T/T-Mobile merger has been on the rocks and looked all but dead as of this week, but now Bloomberg is reporting that AT&T may be willing to divest huge amounts of T-Mobile to make sure this merger works. The Department of Justice and FCC have both been investigating the proposed merger, and just two days ago, the carriers withdrew the application from the FCC. It has certainly been a wild ride.

Now, a report from Bloomberg is saying that AT&T is still set on making this merger work, and is willing to sell off as much as 40% of T-Mobile's assets in order to make the deal go through. This does seem like a desperate move by AT&T, because even though selling off more assets could appease the DoJ's concerns that the merger would reduce competition, it is unlikely that the DoJ would allow the T-Mobile assets to be purchased by Verizon. So, AT&T would have to find a way to spread out the sale of assets to other far smaller carriers, which may not have the capital to make the purchases. AT&T has been in talks with MetroPCS and Leap Wireless to sell T-Mobile assets. 

There is extra trouble in that AT&T would have to sell a higher proportion of customers and a lower amount of spectrum to make the deal work. Ultimately, it seems that AT&T will just have to focus on fighting the DoJ lawsuit which is scheduled for February. 

It is still possible that this deal could go through, but it won't be clean or easy for AT&T. 

source: Bloomberg

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44 Comments

1. christony1120

Posts: 65; Member since: Dec 07, 2010

you see ATT is just not capable in handling the merger nor T-mobile

23. networkdood

Posts: 6330; Member since: Mar 31, 2010

Dumb statment, dude - AT&T has to make concessions to get approval from the gov't - it is not about how they are handling the merger , because this one has not taken place yet. Now, when it does take place, then we shall see how it goes.

2. LewsTherin006

Posts: 140; Member since: Nov 18, 2011

even if att gets rid of 40% of Tmobile, they still have to find people with enough money to buy it. Maybe US celluar or Metro PCS, but verizon doesnt look like they want it, and sprint just spent all their money on the iphone.

6. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

"... they still have to find people with enough money to buy it. " "...it is unlikely that the DoJ would allow the T-Mobile assets to be purchased by Verizon." The problem for AT&T is that even at a 40% divestiture, there is still the problem of reduction in competition and loss of jobs. They just don't get it. This is not something that AT&T can spin their way out of. The old routine of lying at every opportunity just won't work. This might have worked back in 2007, but not now. To many jobs have been lost; more job losses can not be swept under the rug.

12. ardent1

Posts: 2000; Member since: Apr 16, 2011

Therefore, the alternative is ATT with a spectrum shortage and Tmobile unable to build out its spectrum and that makes perfect sense to the DOJ and FCC et al. The consumers end up losing in the process.

15. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

ardent - your assertion about spectrum was challenged in the earlier article. Perhaps you could do PA readers a favor and back up your assertions with some objective facts? Just making unsubstantiated claims isn't going to cut it.

37. ardent1

Posts: 2000; Member since: Apr 16, 2011

You are equally guilty of your own assertion -- you provided nothing but hot air. I also challenged the claim that Sprint was able to acquire Tmobile as well, which was complete horses**t. Like Sprint can come to the Capital Markets and raise $39 billions in new debt when it haen't been profitable in about 4 years. How many PA readers can discern Sprint's debt rating and the associated probability of default, i.e. how quickly Sprint could file for bankruptcy? Recall you stated ATT can engage in a hostile takeover of a private concern -- reinforcing the notion that civilians don't have the necessary accounting background or legal knowledge. remixfa, the RVI, goes around claiming RD expense belongs in the gross profit margin calculations.

39. remixfa

Posts: 14605; Member since: Dec 19, 2008

I dont think sprint would be able to pull the capital out of their butts, but they could do a partnership with tmobile. However I dont think that would work well in either's favor since their technology is so different, unless they were purely partnering for a dual LTE roll out where they were able to roam off each other. If they could pull that off and switch everyone to LTE voice & data, then a merge might be feasible, but until then it would make no sense.

24. networkdood

Posts: 6330; Member since: Mar 31, 2010

Funny, that you mentioned jobs - you can thank the government for the loss of 4 million jobs since NAFTA passed.

29. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

How does NAFTA relate to AT&T-Mobile? (Confused)

41. corporateJP

Posts: 2458; Member since: Nov 28, 2009

Yep. I didn't think Bill Clinton was a bad president until his wife made him...I mean, he signed the treaty.

3. cncrim

Posts: 1586; Member since: Aug 15, 2011

Att just don't want pay for break up fee...... they keep fighting until last minutes.

4. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

AT&T must be the elliptical machine king... they're doing some serious back-pedaling. They should just admit the merger was only a bid to remove competition. How imperative was the acquisition of T-Mobile when they're willing to divest nearly half of it? $39B could have upgraded a lot of their existing towers.

7. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

"$39B could have upgraded a lot of their existing towers." Interesting how they don't give a red rats ass about upgrading their network. It is all about taking out a competitor. F*ck the market. Maybe not this time around.

13. ardent1

Posts: 2000; Member since: Apr 16, 2011

It's DT (Tmobile's parent) that is saying f**k the US customers because it doesn't want Tmobile to spend the billions to upgrade their network!!

25. networkdood

Posts: 6330; Member since: Mar 31, 2010

Exactly, DT wants to sell - so, let it - SPRINT is incompentent at mergers as we have seen in the past....40% divesting of the sale onto smaller carriers would be a win for those carriers. But, jobs will be lost.

42. corporateJP

Posts: 2458; Member since: Nov 28, 2009

Sell it to Century Link...they want to get into the business. It's not rocket science. SOMEBODY will buy it eventually. AT&T just sucks, I don't want them to get it.

14. ardent1

Posts: 2000; Member since: Apr 16, 2011

That is one the biggest problems on this site -- civilians that don't understand business speak. The $39 billion is the consideration for the entire Tmobile franchise and some of that value would be goodwill after accounting for the market value of the said assets per acquisition accounting under US Gaap.

16. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Ummm. And you are the expert in 'business speak'? $39 Billion is what DT wanted to approve the merger. Otherwise, it would have been a hostile takeover. Without DT's agreement, AT&T was going nowhere in it's attempt to acquire T-Mo.

36. ardent1

Posts: 2000; Member since: Apr 16, 2011

Not all the $39 billion is in cash. Tmobile USA is a private concern, so kindly explain to people how ATT can do a hostile takeover of a private subsidiary.

38. ardent1

Posts: 2000; Member since: Apr 16, 2011

One more thing, when I corrected you about your claim of Verizon amortizing it's PPE, you just brush it off. It's clear you are clueless about the income statement and US Gaap. Then there was the time I corrected you because you had no idea how companies calculate margins and you mistakenly claimed you knew Apple's margins. DxD, it's clear you are business speak challenged. I can find more examples where you butcher common business terms. The good news is you are not alone as other PA equally butcher business terms on a regular basis. The RVI doesn't have a clue as to what is a market niche.

19. remixfa

Posts: 14605; Member since: Dec 19, 2008

Ardent, can you ever post without trying to throw a back handed insult at someone? for someone who claims to be "a professional", you sure lack the ability to act like one.

43. ardent1

Posts: 2000; Member since: Apr 16, 2011

There you go again -- making stuff up. I never claim to be a "professional." Instead, I claim to be knowledgeable -- a big difference amongst these two words. So remixfa, how's your histronic personality disorder treatments working out. I see you still can't control your insults.

5. snowgator

Posts: 3621; Member since: Jan 19, 2011

They really, really want the spectrum. Why not just make an offer on the spectrum that T-Mobile can't use?

17. remixfa

Posts: 14605; Member since: Dec 19, 2008

if they did that, and T-Mobile turned the stalled carrier into a growing carrier, it would only hurt T-Mobile in the long run as they wouldnt have that extra spectrum to grow on.

21. vvelez5

Posts: 623; Member since: Jan 29, 2011

I can only think that the cost for the spectrum is close enough to the cost of purchasing TMO outright. DT is trying to sell and ATT gets some contracts while they're at it.

31. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

I doubt the value of the spectrum is anywhere near $39 billion in an auction environment. VZW won\'t be able to bid, and Sprint is going to offer less than $39 B (they don\'t have access to anywhere near that kind of cash after selling their soul to Apple for the iPhone franchise). $39 B is what AT&T had to offer for a friendly merger.

30. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Or, why not do a partnership where AT&T invests in building out T-mo\'s network for them (T-Mo). In return, AT&T customers get access to T-Mo\'s network when they are in the area and AT&T has no coverage. Sprint and VZW had (maybe still have) a similar agreement for their 3G network. AT&T is really hurting their case by insisting that the only way a deal can be done is with an acquisition of T-Mo.

8. rfrapp

Posts: 77; Member since: Jun 10, 2010

I don't understand why AT&T and T-Mobile need to pass through the FCC to make their merge. I don't by any means agree with the merger, but businesses should be able to do whatever they want. The government should have no say in what a business does. If this merger ends up screwing AT&T, then they'll lose business and be forced to do something about it. That's how it should work

18. remixfa

Posts: 14605; Member since: Dec 19, 2008

its called anti-competitive practices. its also called a monopoly (or in this case a duopoly). These rules are in place to protect the consumer from unfair business practices that disrupt the free market.

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