AT&T planning to sell part of T-Mobile to Leap Wireless

T-Mobile

The AT&T and T-Mobile merger is on the verge of collapse, but AT&T has a plan to save it, says New York Times Journalist Andrew Ross Sorkin. Sorkin claims AT&T has been in talks with Leap Wireless to sell a chunk of T-Mobile to the regional wireless carrier. AT&T hopes this divestiture will make it easier to get approval for the deal.

As part of this plan, AT&T would sell off a large chunk of T-Mobile’s customers and some wireless spectrum to Leap. AT&T would keep the bulk of T-Mobile’s valuable spectrum assets, which it needs for its 4G LTE network. The deal would create four major wireless carriers with T-Mobile/Leap solidly in fourth place behind Sprint. AT&T wouldn’t get too big and the wireless industry would remain competitive.

This strategy looks good at first glance, but it falls apart under scrutiny. As Sorkin points out, AT&T’s scaled-down acquisition of T-Mobile still leaves us with a duopoly of Verizon and AT&T. Even with a big divestiture, the two carriers would be well ahead of their smaller rivals. Customer base is only one part of this controversial deal; wireless spectrum also plays a role. T-Mobile might gain the customer base of Leap Wireless, but it would lose its valuable spectrum. Without spectrum, the carrier can’t build out its network and would fall even further behind in the wireless market.

[New York Times]

  • Red777

    also minor issue that Leap doesnt have any money and is already one of the most levered operators out there, and as you pointed out, with one of the weakest spectrum depth positions (on a per market basis) among the majors.  even if t-mobile finances Leap, the resulting entity will be even weaker (highly levered compared to being subsidiary of deutsche telecom) tehn the current t-mobile usa. DOJ folks aren’t that dumb. this deal is DOA.

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