AT&T considers selling $8B in network assets to gain approval for T-Mobile deal
AT&T has reportedly hired bankers to prepare for the possibility that it will need to sell off assets worth as much as $8 billion in order to gain regulatory approval for its proposed $39 billion acquisition of T-Mobile USA.
Sources told The Wall Street Journal that the wireless operator hired Bank of America Merrill Lynch to find potential buyers of customers and wireless spectrum. Internal analyses of which customer markets would have to be divested ahead of regulatory approval suggest more than $8 billion in assets could be sold off, people familiar with the matter said.
AT&T and Bank of America declined to comment on the matter, though one spokesman for the carrier did reiterate the company's earlier position that it expects to sell at least some of its assets.
"As we said on the day we announced the merger with T-Mobile USA, we anticipate there will be some divestitures, as we have had in past mergers, but any speculation about the amount of divestitures is premature," said an AT&T spokesman.
Antitrust approval for the deal could arrive as early as the first quarter of 2012, the report noted, although AT&T is said to face a "steep climb" in convincing the Federal Communications Commission chairman to sign off on it.
The FCC announced earlier this week plans to review the merger in conjunction with the proposed acquisition of wireless licenses from Qualcomm. Last month, the federal agency said its review of the deal had been delayed while it awaited new economic data from AT&T.
U.S. Sen. Herb Kohl (D., Wis.) sent a letter to the Attorney General and FCC Chairman in July recommending that the deal be blocked. According to the senator, the deal would ""would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest."
In May, Kohl presided over a senate subcommittee hearing that challenged AT&T and T-Mobile officials to "convince" the committee what the merits of the deal are.
AT&T announced in March the $39 billion deal with Deutsche Telekom that would give the German carrier an 8 percent stake in AT&T in exchange for its U.S. operations. The merger has quickly drawn vocal opposition from Sprint, which claims it would have difficulty competing against the resulting duopoly of AT&T and Verizon.
Sources told The Wall Street Journal that the wireless operator hired Bank of America Merrill Lynch to find potential buyers of customers and wireless spectrum. Internal analyses of which customer markets would have to be divested ahead of regulatory approval suggest more than $8 billion in assets could be sold off, people familiar with the matter said.
AT&T and Bank of America declined to comment on the matter, though one spokesman for the carrier did reiterate the company's earlier position that it expects to sell at least some of its assets.
"As we said on the day we announced the merger with T-Mobile USA, we anticipate there will be some divestitures, as we have had in past mergers, but any speculation about the amount of divestitures is premature," said an AT&T spokesman.
Antitrust approval for the deal could arrive as early as the first quarter of 2012, the report noted, although AT&T is said to face a "steep climb" in convincing the Federal Communications Commission chairman to sign off on it.
The FCC announced earlier this week plans to review the merger in conjunction with the proposed acquisition of wireless licenses from Qualcomm. Last month, the federal agency said its review of the deal had been delayed while it awaited new economic data from AT&T.
U.S. Sen. Herb Kohl (D., Wis.) sent a letter to the Attorney General and FCC Chairman in July recommending that the deal be blocked. According to the senator, the deal would ""would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest."
In May, Kohl presided over a senate subcommittee hearing that challenged AT&T and T-Mobile officials to "convince" the committee what the merits of the deal are.
AT&T announced in March the $39 billion deal with Deutsche Telekom that would give the German carrier an 8 percent stake in AT&T in exchange for its U.S. operations. The merger has quickly drawn vocal opposition from Sprint, which claims it would have difficulty competing against the resulting duopoly of AT&T and Verizon.
Comments
How will that scenario work out for competition?
This was a foregone conclusion. And, the deal's pretty much sewed up.
Thanks 100% to greedy and corrupt government officials. This deal should never go through.
Thanks 100% to greedy and corrupt government officials. This deal should never go through.
Well, when the country collapses, the people in charge'll be kicked out and the remains of AT&T's company after the Second Great Depression will have to try to make the deal again with more virtuous leaders.
So that's a positive.
Honestly, they need to not allow this. but i have little faith, seems like all gov't agencies are owned and run by big business.
I don't care what you're willing to pretend to do, AT&T. I don't want you to be the only nationwide GSM provider.
GSM isn't a longterm issue for the US and neither is WCDMA as AT&T and T-Mobile already operate on different spectrums. I haven't exactly seen vendors lining up to make phones that work on both WCDMA-based mobile networks.
After that you have LTE which should be pretty solid of the US moving forward. We'll have a few different spectrums but the LTE chips should work with all of them. We'll also getting to the point that having all major '2G' and '3G' network types and spectrums in the same svelte chip is becoming a reality so that what matter much in the future of a vendor controlled market.
This buyout (what they call a merger) is anti-competitive and scary.
Honestly, they need to not allow this. but i have little faith, seems like all gov't agencies are owned and run by big business.
So you think that AT&T should be more competitive by not accepting any more customers because they don't have the bandwidth for them? Actually, both options is bad for competition. AT&T wants T-Mobile for both their towers and their spectrum. If you let things continue as they are, you lose AT&T as a competitor because they can't take more customers due to bandwidth limitations. The fact that AT&T has more customers then T-Mobile suggests that they are already more competitive then them. To make the market more competitive then it is now more drastic changes would need to be made.
Maybe we should free up some more poorly allocated spectrum if we really want competition. There can only be so much competition with utilities... there never has been an ideal way to handle that. One reason why many utilities remain publicly owned. There are some interesting ideas that may work in this situation though, like running extra fibre for ground lines with government grants and then selling off the fibre to multiple competitors to pay for the grants. That works because fibre is cheap, but digging up the ground is expensive. That system is used in parts of europe... maybe the same thing should happen with cell towers. Government builds them, then sells antenna rights to multiple carriers to pay for the towers. No tower duplication and no tax dollars consumed.
Apple actually adds a bit of competition because they hold sway over the carriers with iPhone contracts. There would at least be someone looking out for the consumer with just standard self regulation.
There are too many variables involved. This is why anti-monopoly regulation tends to be broken.
GSM isn't a longterm issue for the US and neither is WCDMA as AT&T and T-Mobile already operate on different spectrums. I haven't exactly seen vendors lining up to make phones that work on both WCDMA-based mobile networks.
After that you have LTE which should be pretty solid of the US moving forward. We'll have a few different spectrums but the LTE chips should work with all of them. We'll also getting to the point that having all major '2G' and '3G' network types and spectrums in the same svelte chip is becoming a reality so that what matter much in the future of a vendor controlled market.
Two companies serving LTE is still too few. And that's what we'll have when the merger goes through.
OOH! Anti-merger slogan right there! Catchy!
So you think that AT&T should be more competitive by not accepting any more customers because they don't have the bandwidth for them? Actually, both options is bad for competition. AT&T wants T-Mobile for both their towers and their spectrum. If you let things continue as they are, you lose AT&T as a competitor because they can't take more customers due to bandwidth limitations.
This has been disproved dozens of times Already. AT&T has SO much spectrum just lying around that it doesn't use it's not even funny.
This has been disproved dozens of times Already. AT&T has SO much spectrum just lying around that it doesn't use it's not even funny.
What "spectrum lying around"? Can you explain further?
What "spectrum lying around"? Can you explain further?
http://news.cnet.com/8301-30686_3-20058494-266.html
that about does it.
THis deal is bad for everybody, including AT&T customers. In one swift move it creates a monopoly on the GSM network. Some people say if you are a T-Mobile customer, well go to Verizon or Sprint. Tell me how I am going to take my expensive GSM iPhone that I bought to use on T-Mobile and go to Sprint (as I hate Verizon even more then AT&T)? I can't. Neither can the other million plus T-Mobile users who use unlocked iPhones on T-Mobile. I can sell the phone, but the market value will drop over night as well because most people in the US buy used iPhones to use on T-Mobile.
The foundation of a free market is the ability for consumers to vote with their feet. For people owning expensive GSM phones, that will not be an option. Further, Leap Wireless, Metro PC, and Sprint all reported poor earnings this last quarter largely because of subscriber loss. How can those companies remain competitive when the top selling phones, like the iPhone, are off limits to their customers even when those phones are off contract?
Further, T-Mobile's prices are far more family friendly. The government has a responsibility to make sure the public's airwaves are being used for the public benefit. Creating conditions for healthy competition ensure that. Allowing higher prices for everybody doesn't effectuate that goal. After AT&T bought Cingular, prices went up. Not good in a depressed economy.
Moreover, the economy will take a further hit as AT&T lays off thousands of employees. Not mentioning the effect of all the T-Mobile closed stores. The tax payer will subsidize this purchase by being forced to pay unemployment benefits to the displaced workers. Local governments will be out local taxes which means they will even be trying harder to squeeze the rest of us for money.
Finally, self regulation is a joke. Hardware manufactures like Apple would be hurt because they will have less leverage against the carriers. AT&T and Apple both needed each other when the iPhone came out. As such, Apple was able to strike an unheard of deal where it would control the whole customer experience related to the hardware. If the sale goes through, Apple will need AT&T more because AT&T will be able to use that market strength to solicit better terms from hardware manufactures like Apple. If a hardware manufacture wants to succeed it will have to be on AT&T.
If this deal goes through, which I suspect it will, the DOJ and FCC are jokes.
So you think that AT&T should be more competitive by not accepting any more customers because they don't have the bandwidth for them? Actually, both options is bad for competition. AT&T wants T-Mobile for both their towers and their spectrum. If you let things continue as they are, you lose AT&T as a competitor because they can't take more customers due to bandwidth limitations. The fact that AT&T has more customers then T-Mobile suggests that they are already more competitive then them. To make the market more competitive then it is now more drastic changes would need to be made.
Maybe we should free up some more poorly allocated spectrum if we really want competition. There can only be so much competition with utilities... there never has been an ideal way to handle that. One reason why many utilities remain publicly owned. There are some interesting ideas that may work in this situation though, like running extra fibre for ground lines with government grants and then selling off the fibre to multiple competitors to pay for the grants. That works because fibre is cheap, but digging up the ground is expensive. That system is used in parts of europe... maybe the same thing should happen with cell towers. Government builds them, then sells antenna rights to multiple carriers to pay for the towers. No tower duplication and no tax dollars consumed.
Apple actually adds a bit of competition because they hold sway over the carriers with iPhone contracts. There would at least be someone looking out for the consumer with just standard self regulation.
There are too many variables involved. This is why anti-monopoly regulation tends to be broken.
THis deal is bad for everybody, including AT&T customers. In one swift move it creates a monopoly on the GSM network. Some people say if you are a T-Mobile customer, well go to Verizon or Sprint. Tell me how I am going to take my expensive GSM iPhone that I bought to use on T-Mobile and go to Sprint (as I hate Verizon even more then AT&T)? I can't. Neither can the other million plus T-Mobile users who use unlocked iPhones on T-Mobile. I can sell the phone, but the market value will drop over night as well because most people in the US buy used iPhones to use on T-Mobile.
.
I doubt your phone is going to drop in value. I will work on the T-Mobile/AT&T Network. No, most phones bought/sold on eBay are NOT being used on T-Mobile. That only applies to phones that are unlocked and the vast majority of iPhones on eBay are still locked. Most people buy iPhones on eBay because they would rather not renew a contract with AT&T.
I am a prime example. I sold two iPhone 3GS (locked to AT&T - not going to be used on T-mobile) so I could buy a fantastic condition iPhone 4 with a 2-year Applecare plan included with the phone. I paid about $200 extra for the luxury of renewing with AT&T. Why? Because I want to be able to jump ship from AT&T if the merger goes through. I will sell my phone and go to sprint or a local carrier if need be. I already have a phone for travel to Japan.
If you are that concerned about the value of your phone (which I really don't expect to drop in value) just sell it before the merger is officially completed.
So you think that AT&T should be more competitive by not accepting any more customers because they don't have the bandwidth for them? Actually, both options is bad for competition. AT&T wants T-Mobile for both their towers and their spectrum. If you let things continue as they are, you lose AT&T as a competitor because they can't take more customers due to bandwidth limitations. The fact that AT&T has more customers then T-Mobile suggests that they are already more competitive then them. To make the market more competitive then it is now more drastic changes would need to be made.
Maybe we should free up some more poorly allocated spectrum if we really want competition. There can only be so much competition with utilities... there never has been an ideal way to handle that. One reason why many utilities remain publicly owned. There are some interesting ideas that may work in this situation though, like running extra fibre for ground lines with government grants and then selling off the fibre to multiple competitors to pay for the grants. That works because fibre is cheap, but digging up the ground is expensive. That system is used in parts of europe... maybe the same thing should happen with cell towers. Government builds them, then sells antenna rights to multiple carriers to pay for the towers. No tower duplication and no tax dollars consumed.
Apple actually adds a bit of competition because they hold sway over the carriers with iPhone contracts. There would at least be someone looking out for the consumer with just standard self regulation.
There are too many variables involved. This is why anti-monopoly regulation tends to be broken.
Mmm... an interesting idea... Kind of an Interstate Highway system for voice/data. I don't like the idea of another government bureaucracy but, done right there are some advantages/goals:
-- pays for itself rather than tax (appropriate, mismanage, divert, waste, skim) spend what's left
-- state/local preference with fed eminent domain trump card e.g. good service gets delivered to San Francisco, NY, etc. *
-- implemented/maintained by private industry
-- shovel-ready jobs, now, with no ramp up time
-- improve speed, quality, delivery, flexibility of service
-- encourage competition among existing carriers
-- reduce entry-cost threshold for new providers
-- reduce costs to consumers
In fact, an enterprising company could allow consumers to choose a carrier on a per-call/task basis - based on speed, availability, quality, usage discount or just preference..
* I watched the Republican Iowa debate last night. One suggestion was offered on how to implement needed Federal Policy with out the attendant Federal Bureaucracy. The idea come from Newt Gingrich and was referring to Education or Health Care, AIR. Say what you will about him, Newt is a very intelligent man, and has some interesting ideas.
Here's the idea: Set up a local, city (in most cases), infrastructure to administer the system. He suggested something akin to the Selective Service System of World War II. The system was setup to fairly administer the draft of servicemen.
What was interesting is that a locally staffed and administered group of people determined who was drafted and who was exempted (often, a life and death decision), assumably based on local mores and needs.
Certainly, there were some abuses -- but as Newt said: over-all, the system was efficient, well-respected, effective and was thought (by the public) to have done a good job. Unusual descriptions for implementation of a Federal Government Policy.
I am old enough to remember that war, and it was a very patriotic time -- where most people put the needs of their country and humanity, in general, above their own personal desires.
Would it not be cheaper for AT&T to simply bribe more members of the committees?
Implying they haven't already.
http://news.cnet.com/8301-30686_3-20058494-266.html
that about does it.
Where does that say that AT&T has 'plenty of spectrum just lying around'?
It says that AT&T has more spectrum than anyone else. But if you graph spectrum divided by number of users, you get a different story.