AT&T Considers Selloff to Save T-Mobile Buyout

AT&T is apparently considering selling off more of its assets than originally planned to appease Federal regulators in its effort to buy T-Mobile USA. The U.S. Justice Department, along with the Federal Communications Commission and some cell service providers are opposing the proposed deal that AT&T says is necessary to improve the mobile communication market.

An unnamed source familiar with AT&T’s plans told Bloomberg that resistance to the US$39 billion deal has the cell service provider considering the extra selloff to keep its plans from falling apart. By selling off more of its own business, AT&T reckons, the perceived threat to competition would be reduced to a level that regulators would be more comfortable with.

AT&T may sell off more to save T-Mobile dealAT&T may sell off more to save T-Mobile buyout

AT&T announced in March that it had struck a deal with Deutsche Telekom to buy T-Mobile USA for $39 billion in cash and stock. AT&T has maintained that the deal will help it build out its faster cell data network in a shorter time frame in part because of the radio spectrum T-Mobile currently controls.

“AT&T and T-Mobile USA customers will see service improvements — including improved voice quality — as a result of additional spectrum, increased cell tower density and broader network infrastructure,” AT&T said at the time.

The DOJ responded by filing a lawsuit in August to block the merger. Deputy Attorney General James M. Cole commented, “The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services.”

The DOJ’s trial, set for February 13, 2012, could be avoided if AT&T manages to convince regulators that by offloading more customers and spectrum to other carriers, competition won’t be negatively impacted. Assuming AT&T does move to divest more than originally planned, the announcement could come as ahead of a scheduled November 30 hearing in the DOJ case.

That announcement, however, may not come, according to Sanford C Bernstein analyst Craig Moffett.

“It’s very hard to envision a solution that would satisfy the problems the DOJ found with the deal,” he said. “Realistically, AT&T is going to take its chances in court in February. It’s all or nothing.”