AT&T Inc is expected to soon present a proposed solution to US antitrust regulators to salvage its planned $39 billion acquisition of smaller rival T-Mobile USA, according to people close to the matter. Even as the No 2 US wireless service provider gears up for a lengthy court battle against the Justice Department, AT&T is prepared to make concessions to address concerns that the T-Mobile deal is anti-competitive and could cause wireless prices to rise.
This two-track plan will allow AT&T to try to find a settlement before the lawsuit reaches the court. "AT&T is pretty determined that they can find a solution, and they are pretty confident," one of the sources said, requesting anonymity as the talks are private. The US government on Wednesday sued to block AT&T's purchase of T-Mobile USA, a deal that would vault the combined company above Verizon Wireless as the No 1 player in the United States.
If AT&T fails to defeat the lawsuit, it would have to pay T-Mobile parent Deutsche Telekom an estimated $6 billion in cash and other assets as part of the original deal. Details of AT&T's proposed settlement were not available, but it is expected to include pledges to maintain T-Mobile's relatively cheap mobile subscription plans, and asset sales.
AT&T may have to sell up to 25 percent of T-Mobile's business, including airwaves and customers, two sources said, to address the government's concern that just three companies would control 90 percent of the US wireless market if the merger goes through.
Bob Doyle, a former antitrust enforcer now in private practice, said it would be difficult for AT&T to reach a settlement with the Justice Department as there would have to be divestitures on both the national and regional level. While there might be several buyers for regional assets, the only possible buyers for national assets are Verizon Wireless and No 3-ranked Sprint Nextel Corp - which could cause another round of antitrust scrutiny.
"Verizon's a no go. Sprint may be a no go also," said Doyle. AT&T, led Chief Executive Randall Stephenson, declined to comment, referring questions to its previous statement that it believed in the merits of its deal and planned to fight the government's suit. US District Judge Ellen Segal Huvelle in Washington, D.C., was selected at random to preside over the case, one of the biggest antitrust court battles in years. She has a reputation for speedy rulings, which would be welcome to AT&T compared with months or even years of uncertainty. For Deutsche Telekom, it has tried for years to find a way out of its T-Mobile business, and has no Plan B.