AT&T may divest $8B in assets to close T-Mobile deal
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- Published on Friday, 12 August 2011 19:15
WSJ reported yesterday that the telecommunications giant has hired bankers to advise it on the potential sale of customers and spectrum--assets that may be worth $8 billion or more.
While it's no huge surprise that AT&T will need to make concessions--the company's chief executive, Randall Stephenson, said as much--this is the first time there has been a value placed on the trade-offs it will have to make to get the deal done.
The concessions, which come in the form of divested markets and customers, as well as spectrum, mark a steep price AT&T will have to pay to get the deal approved. The merger combines the second and fourth-largest wireless carriers in the nation, creating a giant player that critics have complained would control too much power in the industry.
The potential sale could be a boon to other carriers such as Verizon Wireless, or even smaller regional players such as MetroPCS and Leap Wireless. All of the companies are eager to scoop up spectrum, while the prepaid providers could pick up additional markets.
The hiring of Bank of America as an advisor suggests AT&T has some level of confidence that the deal will be approved. WSJ reported that the bank hasn't yet started the formal sales process, and won't do so until it is further along in getting its approval.
Much of the assets sold would come from the T-Mobile side, WSJ reported, although AT&T may choose to divest some of its own markets.
The concessions would come on top of the $39 billion AT&T is paying to acquire T-Mobile from Deutsche Telekom. The deal was announced in March, and the companies still expect to close it by the first quarter of next year. But with the intense scrutiny and opposition it faces, the deal isn't guaranteed to be approved.
The deal has won praise from technology companies in Silicon Valley to governors and state officials. But it has also drawn criticism from consumer groups, smaller carriers such as Sprint Nextel and MetroPCS, and key senators.
(CNET News)
