AT&T, Deutsche Telekom Considering Joint Venture in T-Mobile Deal

AT&T and Deutsche Telekom are apparently considering a joint venture should AT&T’s plans to buy T-Mobile USA fall through. The merger is facing serious opposition, and a joint venture with T-Mobile’s parent company could work around those issues while still giving AT&T access to the infrastructure it’s been hoping to gain.

Anonymous sources told The Wall Street Journal that the idea of a joint venture between AT&T and Deutsche Telekom is more of a back up plan should AT&T fail to convince Federal regulators to green light the merger.

AT&T and Deutsche Telekom may go for a joint ventureAT&T, Deutsche Telekom have a backup plan for T-Mobile deal

In March AT&T announced a deal with Deutsche Telekom to buy T-Mobile USA for US$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 Department of Justice 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.”

Earlier this week, word surfaced that AT&T is considering divesting more of its assets in hopes of convincing regulators to let the deal go through. By selling off some of its spectrum and customers to other companies, AT&T could argue that concerns over anticompetitive practices are unwarranted.

Sanford C Bernstein analyst Craig Moffett, however, doesn’t think selling off more assets will convince regulators that the merger is a good idea. “It’s very hard to envision a solution that would satisfy the problems the DOJ found with the deal,” he said.