AT&T’s proposed acquisition of T-Mobile is looking even less likely than ever, now that there’s a report saying the negotiation to sell off some of T-Mobile’s assets ? AT&T’s last-ditch effort to save the $39 billion deal ? has stalled.
The Wall Street Journal reports that talks between AT&T, T-Mobile USA owner Deutsche Telekom and Leap Wireless International have hit a roadblock. Leap was concerned that even if Deutsche Telekom succeeds in selling off many of T-Mobile’s assets, the U.S. Department of Justice (DoJ) would still probably kill the deal.
The sale would have been part of a plan to divest 30% of T-Mobile’s assets to appease government regulators and get the deal pushed through. AT&T began pursuing this route in earnest after the DoJ sued to block the deal in August. Then last month the Federal Communications Commission expressed serious concerns about the deal and issued a report recommending a formal hearing on its legality. AT&T subsequently withdrew its application to the FCC, choosing instead to focus on battling the DoJ and putting the divestiture plan into place.
In addition to Leap Wireless, Dish Network, MetroPCS and foreign buyers are interested in acquiring some of T-Mobile’s assets, the Journal reports, though the stalled talks with Leap may have left things at a dead end.
Now that both the original deal and the divestiture plan appear to be dying, AT&T may simply decide to kill the deal altogether. However, that will leave the company on the hook for $4 billion that it must pay Deutsche Telekom if the acquisition falls through. It would also leave T-Mobile USA still looking for a buyer, but from a weaker market position than before. It will also mean AT&T will need to regroup on many of its long-term strategies, notably its deployment of LTE.
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