AT&T Attempting to Rescue T-Mobile Acquisition in Last-Minute Deal


AT&T is still attempting to save its merger deal with T-Mobile by trying to sell a portion of T-Mobiles assets to a smaller wireless provider.

The $39 billion acquisition, which was originally announced in March, would unite the second and fourth-largest wireless carriers in the U.S. something that the U.S. Justice Department, the FCC and other wireless carriers see as a monopoly threat to the sector. The deal looked all but finished when AT&T and T-Mobile ! withdrew their approval application from the FCC last week. AT&T said it would lose $4 billion in breakup fees this quarter if the deal falls through.

Now, AT&T is secretly working on an audacious 11th-hour deal to rescue the merger, Dealbook reports. The carrier is trying to sell a sizable portion of T-Mobiles customer accounts and some of its wireless spectrum to Leap Wireless, the seventh largest wireless telecommunications network in the U.S. The second deal, should it go through, would make Leap the fourth-largest U.S. carrier, while giving AT&T a better chance of winning approval for the acquisition of T-Mobiles remaining assets.

AT&T says it needs those assets to expand its nascent long-term evolution (LTE) network, which it debuted in Sept., 10 months after Verizon began rolling out its LTE network. AT&T has already rolled out five smartphones designed to run at LTE speeds, but only fifteen metropolitan areas Dallas/Forth Worth, San Antonio, Houston, Atlanta, Chicago, Boston, Washington, D.C., Baltimore, Athens, GA, Charlotte, Indianapolis, Kansas City, Las Vegas, Oklahoma City, and San Juan, Puerto Rico currently offer support for LTE. According to the companys filings, AT&T needs to acquire T-Mobile to bring the network to 97% of the country. At present, AT&T is only planning to extend LTE to 80% of Americans, which would put the companys network behind Verizons.

According to Dealbook, lawyers working on the deal with Leap Wireless estimate the likelihood it will go through at 60% to 70%. Should it fail however, AT&T still has a few options for! buildin g up its network, as my colleague Peter Paschal suggested last week. The company could, for instance, purchase the 700MHz D Block of spectrum that the FCC failed to auction off in 2008, should the company be able to persuade the FCC to put it back up for sale. The other alternative is, of course, to build the infrastructure (cellphone towers, switches, etc.) AT&T wanted to acquire from T-Mobile in the first place.

More About: att, leap wireless, T-Mobile

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