AT&T may be forced to divest select assets in T-Mobile deal

AT&T building
AT&T building

AT&T’s CEO Randall Stephenson confirmed that AT&T may be forced to divest customers and wireless spectrum in its bid to acquire T-Mobile USA. This admission does not come as a surprise as mergers involving two major wireless companies would require some form of divestiture. Verizon Wireless had to concede select assets when it purchased Alltel and AT&T had to divest a limited number of markets when it acquired Centennial Wireless. Ironically in these two divestitures, Verizon bought a chunk of AT&T’s divested Centennial assets and AT&T was the highest bidder on some of Verizon’s divested Alltel assets.

This particular merger between AT&T and T-Mobile poses some challenges with divested assets. T-Mobile and AT&T are the two largest GSM carriers in the U.S. Divested assets from the two companies will most likely be GSM-based technology and attractive to only smaller, regional carriers like Cellular One. Of course a carrier like Sprint would benefit from the purchase of the cell towers which can be outfitted with Sprint 3G or WiMAX antennas.

Spectrum assets may be more attractive to some of the larger wireless carriers like Verizon Wireless and Sprint, but the frequency of the divested spectrum is important as CDMA spectrum allocation is different from the GSM owned by T-Mobile and AT&T. AT&T does own a chunk of 700 MHz spectrum that both it and Verizon Wireless plan to use for LTE. Though Verizon and other carriers

The acquisition of T-Mobile by AT&T is expected to take about a year so we have plenty of time to analyze and scrutinize this deals as it navigates the murky waters of the government approval process. Sounds like fun, no?

[Via WSJ]

  • AT&T would have to divest MAJORITY of the T-Mobile network, since MAJORITY of it overlaps with AT&T. Verizon and AT&T have worked together behind closed doors for the good part of a decade to gobble up and become the only two REAL competitors. I think any company regardless if they need the spectrum or not, should buy it, even if it costs them more than its worth right now. Why? Because AT&T and Verizon will both need it, and eventually they will need to pay handsomely for it, either buy it back from the company that bought it, or buy out the company who has it, either way, it will be valued way more then it was purchased at, and generally even more than the company is worth. Hell T-Mobile was running at a loss, it cost DT $40B to buy up all their networks, and they sold out for LESS then it took to build. T-Mobile is also only valued at less than $30B anyway – so in the case of someone like Sprint, this could be a massive win.

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