AT&T is preparing to sell off as much as $8 billion of its network in order to make itself a bit smaller and gain regulatory approval for its acquisition of T-Mobile, according to a story from the Wall Street Journal.
The story cites unnamed sources close to the matter, and says AT&T has hired Bank of America’s Merrill Lynch to help with the sell-off. The story says most of the sales would be coming from the T-Mobile side of the deal, although some might come from AT&T’s business as well. But nothing is going to happen until a date closer to the regulatory approval of the merger, which is set to take place in 2012.
AT&T hasn’t confirmed whether it has hired the bank or is preparing for the selloff, according to Electronista, but said the company has made clear it will sell assets if that’s what it takes to get the merger to meet with regulatory approval from the U.S. government.
Although it may be willing to sell of some assets and try to make itself a little smaller before the merger, critics of the deal say T-Mobile combining with AT&T still narrows the field of wireless providers too much. They contend that even with the selloff, AT&T will still have a big lead in the cellular provider market, making it a lot harder for the smaller companies, including Sprint, to attract customers and effectively compete.
AT&T, for its part, states that the merger will allow the company to bring its 4G LTE service to more than 97 percent of the U.S., something that wouldn’t be possible without the inclusion of T-Mobile’s network with its own. It also states that somebody is going to acquire T-Mobile eventually, if not AT&T, so competition is going to be reduced regardless.
Opponents of the merger fear a monopoly with AT&T and T-Mobile under the same flag, and some AT&T customers are even looking to sue to stop the $39 billion deal. They claim the addition of T-Mobile’s network will also include T-Mobile customers, causing even further strain on AT&T’s overtaxed airwaves. That’s to say nothing of the higher prices reduced competition will bring to the market.
AT&T argues that the merger will only make its network better. It also has the support of more than 70 members of Congress, as well as nearly 30 governors and better than 70 city mayors. The expansion is set to bring 4G LTE technology available to about 55 million more Americans in rural areas than would have access without the merger, AT&T also said.
It’s not clear where the Federal Trade Commission, which will be reviewing the merger, falls in the debate. Likely, we won’t really know which way the government is leaning until much closer to the actual ruling. While some government officials back the deal, some others, including Minnesota Democratic Sen. Al Franken, oppose it. If the deal does get approved, it’s a fair bet that the government will have some conditions before AT&T and T-Mobile are allowed to go forward.
