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AT&T gives up on T-Mobile pre-merge purge

Telco mulled flogging assets to save deal

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Talks to sell off some of AT&T's assets to make its merger with T-Mobile USA seem a little less anticompetitive have reportedly stalled.

People familiar with the matter told the Wall Street Journal that one of the options to get regulatory approval for the deal - offloading assets to make the end company less of a behemoth - has gone cold.

Both the Federal Communications Commission (FCC) and the Department of Justice have raised competition concerns over the alliance, leading AT&T and Deutsche Telekom, parent of T-Mobile USA, to go back to the drawing board.

The companies have withdrawn their application for approval to the FCC and asked the DoJ for an extra month to work on their proposed marriage. However, the aforementioned moles said the chances of the full blown merger going ahead are now pretty slim.

Another option open to the telcos, if they want to push ahead with some sort of deal, is to start a joint venture. Alternatively, AT&T could abandon its designs on T-Mobile USA and take a stake in a smaller carrier.

AT&T is pushing the deal because it wants to get its hands on some of T-Mobile's wireless spectrum, fast becoming a rare commodity. But the businesses need the green light from both the FCC and the DoJ to go ahead, which is not looking likely after the DoJ took the two to court and the FCC issued a damning report on the deal.

The companies have to come up with something to placate the regulators by 18 January, at which point they'll be facing the DoJ in court to fight or withdraw the merger deal. ®

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