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AT&T planning to sell T-Mobile assets to Leap Wireless?

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.

By Electronista Staff
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  1. qazwart

    Fresh-Faced Recruit

    Joined: Apr 2001


    Fled T-Mobile

    This is the main reason I bailed on T-Mobile. I felt that if T-Mobile and AT&T did manage to merge, AT&T would have to dump T-Mobile assets. And, I figured the assets they'd dump would be T-Mobile's customers onto some third tier carrier than no one ever heard of.

    Plus, T-Mobile's deterioration of their customer support didn't help endear me either. T-Mobile use to have some of the best customer support in the industry and now is near the bottom just ahead of AT&T.

    One of the simple facts about mergers: When company "A" announces it's going to buy company "B", and that there will be lots of cost savings in the "elimination of duplicate services", the employees in company "B" look for new jobs before they're declared a "duplicate service". Good employees in company "B" are able to find jobs and leave. The poor performing employees in company "B" are left behind because no one wants to hire them.

    In the end, enough good people leave that there are no layoffs, so the dregs of company "B" are incorporated into the merged entity. This is why no merged company ever performs as promised.

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