updated 12:00 am EDT, Fri September 2, 2011
ATT said planning two-tier plan to keep T-Mo deal
AT&T is willing to make massive concessions to preserve its buyout of T-Mobile in the light of a Department of Justice lawsuit blocking the deal, insiders claimed late Thursday. Described as a "two-track" plan, the strategy seen by Reuters would see AT&T give up as much as a quarter of T-Mobile's business, including some of the spectrum it was after, customers in key areas, and a pledge to keep T-Mobile's cheaper pricing active. It's "pretty determined" to find a sacrifice that would let it clinch the deal, one tip mentioned, as it wants to avoid court at all costs.
What the other tier of the plan would be wasn't said, though presumably this would be its approach within court.
The carrier was reportedly caught sincerely off-guard. It had only been prepared to shed 10 percent of T-Mobile's assets at first and had expected more talks to find common ground before the lawsuit began. AT&T still wanted another meeting but might not get it given that it's now the defendant in a major antitrust lawsuit.
Any attempt to make a settlement might still end in failure. The scope of the assets that would sell off might be so big that only carriers like Sprint and Verizon could buy them, which in themselves would create antitrust problems. AT&T's proposal, if real, also wouldn't truly address the reason for the DOJ lawsuit, which is concerned as much about taking a major competitor out as the power of smaller competitors.
A lawsuit in a deal as large as the $39 billion acquisition also means that the DOJ, and the now supportive FCC, are convinced enough that the lawsuit is enough of a danger that many of AT&T's arguments might fall apart. It has tried for a patriotic angle on the deal, insisting that the merger was necessary for truly national 4G and that it would ultimately create jobs. Critics have noted that most mergers almost invariably result in a net job loss, and AT&T's own unintentionally published documents revealed that it didn't need the T-Mobile merger to reach its 4G goals.