December 13th, 2011

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I am hopeful AT&T/T-Mo Now Really Wrapping Up

After a disastrous court appearance on Friday (read my personal account here), AT&T and the Department of Justice filed a joint motion to stay all legal proceedings in the case for a month. AT&T and DT simultaneously announced they are reviewing whether and how to continue with the deal.

As I categorize this: "The AT&T/T-Mo merger has announced it will spend more time with its family and pursue other interests."

There is some persistent speculation (primarily by reporters who cannot seem to believe this is over) about either waiting to see the outcome of the 2012 election in the hope of getting a settlement until 2013 or somehow otherwise reworking the deal. I am profoundly skeptical for business reasons. AT&T owes DT $3 bn as a break up fee and $1 bn in spectrum rights. DT is not leaving that on the table. DISH is already making it clear that if T-Mo needs a rebound hook up, it is available. And, if I am reading the signs correctly, the German government (DT's biggest shareholder) feels burned by AT&T for claiming this would sail through.

It's not impossible AT&T might try again in 2013 or 2014, depending on circumstances. In 1997, AT&T the long-distance company started lustily eyeing some of the Baby Bells, then FCC-Chairman Reed Hundt declared such a combination "unthinkable." In 2004, under a Republican FCC and a changed landscape, the Baby Bell SBC bought out AT&T and renamed itself.

But the idea that AT&T and DT are going to simply sit around and hope that the Rs take the White House is, in my opinion, silly. That's a lot of money to leave sitting on the table, not just for DT wrt the break up fee but for AT&T to maintain an outstanding $20 bn line of credit dedicated to the eventual purchase of DT. This is not some Victorian romance where AT&T is going to say to DT: "Be true my love! Soon my cruel guardian will nip off with consumption and my new guardian may give us permission to wed. Oh do but be true!"

In any event, we will know for sure in a few weeks because either AT&T and DT will extend out their deadline for the break up fee, or not. For myself, I am focusing on other work now.