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You are here: Home / Mobile Tech / AT&T Antitrust Options To Be Explored
Lawyers in AT&T Merger Case to Explore Settlement
Lawyers in AT&T Merger Case to Explore Settlement
By Adam Dickter / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
SEPTEMBER
07
2011
The next chapter of the saga of AT&T's attempt to acquire T-Mobile, recently complicated by the Department of Justice, will unfold Sept. 21 in a Washington, D.C. courtroom.

U.S. District Judge Ellen S. Huvelle set that date in an order signed Monday for the U.S. wireless giant, Deutsche Telekom, which now owns T-Mobile, and Justice Department officials who oppose the $39 billion deal, to appear in court to "discuss the prospects for settlement," The New York Times reported. The parties have until Sept. 16 to file plans for pursuing and defending the antitrust case.

The stakes are high for all parties, with some legislators and rival companies arguing that the merger of the No. 2 and No. 4 carriers (by subscribers) will create a monster conglomerate that will stifle innovation and lead to higher rates.

'Consumers Will Suffer'

In a move that took AT&T by surprise on Aug. 31, the Justice Department sided with those critics.

"T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the rollout of the first nationwide high-speed data network," said Sharis A. Pozen, acting assistant attorney general in charge of the Justice Department's antitrust division, in a statement that day. "Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer."

The controversy sheds light on the significant growing pains of a company as large as AT&T.

"They have gotten so big that getting through antitrust [regulations] is going to be problematic going forward," said technology analyst Rob Enderle of the Enderle Group.

"It's pretty clear that the size that AT&T has reached will make it difficult to do any more acquisitions."

A key interest for the carrier is boosting its capacity in available spectrum and upgraded cell towers, Enderle said, and it has to invest billions in its network to keep up with rival Verizon Wireless.

"They can certainly get by without the acquisition, but to address the capacity problems near term, they really need it," he said.

Exit Strategy

If the deal is scuttled, AT&T will have to pay Deutsche Telekom, based in Bonn, Germany, a $3 billion "breakup fee." But that would be a small consolation to the company, said Enderle, since it is anxious to get out of the U.S. market.

"In a market pretty much defined by two players you don't want to be No. 4 in size," Enderle said. "It's not working out for them, they want out and they don't have a Plan B.

"It doesn't look like Verizon or Sprint can buy them out, so it may be that they're kind of hosed, too [if the deal is killed]. They can't afford to stay and they can't afford to leave the market, which puts them between a rock and a hard place."

The Times in its report said the Justice Department had expressed openness to negotiate some aspects of the deal rather than opposing it completely.

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