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AT&T Seeking To Sell Off Underused Bandwidth To Ensure T-Mobile Acquisition

November 29, 2011

AT&T is facing increasing challenges in its bid to acquire fourth-largest carrier T-Mobile USA with a $39 million offer. T-Mobile´s parent company, Deutsche Telekom and AT&T both say they have temporarily halted their application to the Federal Communications Commission (FCC) to merge their cellphone operations.

AT&T also agreed to take a $4 billion charge against earnings, the amount in breakup fees owed to Deutsche Telekom, if the deal is scrapped.

The two companies portrayed, as a tactical play, the withdrawal of the application after the FCC chairman said that he would oppose the deal. The Justice Department filed an antitrust suit to block the merger in August, reports Steve Lohr for the New York Times.

Focusing on the antitrust trial, the companies explained, would now be the first step. Both carriers vowed to continue to pursue their bold plan to combine the cellphone carriers in the United States.

AT&T was in talks as of last night with Leap Wireless, sold in the pre-paid market under the Cricket Wireless brand, to sell wireless spectrum that T-Mobile owns if the T-Mobile merger goes through to the smaller carrier. Cricket Wireless would benefit by giving the company more spectrum and access to more areas, reports Shane McGlaun for Slashgear.

The wireless spectrum that AT&T wants are the bands that are needed for networking, arguing to the FCC that its main motivation for pursuing T-Mobile is to acquire increased wireless spectrum, to build out high-speed, next-generation network capacity to improve its service.

“If that is its goal, then AT&T has to explore ways to salvage as much spectrum out of the deal as it can,” said Kevin Werbach, an associate professor at the Wharton School of the University of Pennsylvania and a former technology policy official at the FCC.

If AT&T proposes selling off a portion of T-Mobile´s bandwidth, it would still have to be approved by the FCC, and AT&T, appears to have miscalculated the government´s antitrust concerns.

The Justice Department, in its lawsuit, concluded that the merger would undermine competition nationally and in nearly all the 100 local markets it measured.

“Justice is saying that this merger is more of a game changer than any before,” said Andrew I. Gavil, a professor at the Howard University law school. “The way the government has presented its objection, looking at all these local markets, makes it very difficult to imagine a formula that would allow AT&T to go forward.”

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Source: RedOrbit Staff & Wire Reports



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