AT&T Trying to Sell T-Mobile Spectrum & Subscribers – But is it Enough?
AT&T (NYSE:T) has approached several smaller wireless players to sell spectrum and subscribers as part of an attempt to save its $39 billion acquisition of T-Mobile, according to a recent report from Bloomberg. [1] These smaller players include Sprint (NYSE:S), MetroPCS (NYSE:PCS), Leap Wireless (NASDAQ:LEAP), Century Link (NYSE:CTL) and Dish Network (NASDAQ:DISH). We believe that any asset sale must be significant for AT&T to get this deal approved.
U.S. government lawsuit smacked AT&T with a nasty setback
Ever since the U.S. government filed an antitrust lawsuit against AT&T to block the proposed T-Mobile deal, AT&T has started to prepare to make concessions to address those concerns. The government’s primary concern was that the deal is potentially anti-competitive; if the merger goes through, only three companies, AT&T, Verizon (NYSE:VZ) and Sprint, would control 90% of the U.S. wireless market. AT&T and Verizon in particular would control most of the postpaid market.
AT&T isn’t addressing concerns about 4th competitor
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In our earlier note titled AT&T’s Plan to Save T-Mobile Deal May Not Be Enough, we argued that even if AT&T succeeds in selling 25% of T-Mobile’s business, AT&T is not addressing the government’s concern of preserving a strong fourth competitor in the wireless market. However, should the assets be sold to Sprint it would likely reduce the pressure from Sprint’s lawsuit, and a strengthened third competitor may be enough to placate the Department of Justice.
See our complete analysis for AT&T stock here
Notes:- AT&T Approaches Rivals to Save T-Mobile Bid, Bloomberg, September 19th, 2011 [↩]