updated 11:10 pm EST, Mon November 28, 2011
Strategy aims to salvage crumbling deal
Just days after a rumor suggested AT&T may be planning to divest nearly half of T-Mobile's assets in a frantic effort to salvage the proposed acquisition, fresh reports shed more light on the shifting strategy. Unnamed sources have told the New York Times that AT&T has engaged in deep negotiations with Leap Wireless, which would purchase the majority of the spectrum and customer accounts that may need to be shed from T-Mobile to assuage regulators' concerns.
Such a move is expected to give Leap a significant boost in the market, bringing the minor player up to the fourth position among US carriers. Despite the repositioning of customer accounts, AT&T is said to be planning to keep most of T-Mobile's spectrum to help expand the former's network.
It is unclear if the divestment strategy will be enough to placate government agencies that view the merger as anticompetitive. The Department of Justice and the Federal Communications Commission both oppose the acquisition, which is expected to lead to job losses despite AT&T's promises to the contrary.
Terms of the agreement between AT&T and T-Mobile are said to cap the divestment at 40 percent of the latter company's assets. If the deal falls through, or if it requires a higher percentage of customer accounts and spectrum to be sold, AT&T faces $4 billion in breakup fees.