Time to stick a fork in the AT&T-T-Mobile deal?
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Time to stick a fork in the AT&T-T-Mobile deal?
No one ever expected the sale of T-Mobile to AT&T to be a smooth operation or a quick one. But some recent developments may point to a looming conclusion that AT&T will not like.
AT&T has withdrawn its application to the Federal Communications Commission for approval of the acquisition. It will have to resubmit a new application down the line if the deal is ever to be finalized, but the company says it’s now concentrating on fighting a lawsuit from the Justice Department, which seeks to block the deal for being anti-competitive. At the same time, AT&T says it’s writing down the $4 billion it would need to pay T-Mobile’s parent company Deutsche Telekom in the event the deal does not go through.
Kevin Werbach is an associate professor of legal studies and business ethics at the Wharton School at the University of Pennsylvania. He says the deal is dead. Why? “Well, the deal is dead because the deal has to be reviewed,” he says. “Any major merger gets reviewed by the Justice Department and the telecom deal also gets reviewed by the FCC. It’s not the norm for the Justice Department to challenge a deal. Most of the time, even with significant mergers like some of the recent ones like Comcast and NBC or Google some of the recent acquisitions it did with DoubleClick and ITA, the Justice Department or the FCC put conditions on the merger, but then allowed them to go through. So, for the Justice Department to stand up and to block it, while that’s not definitive, usually leaves the deal to be abandoned.”
But if there’s a trial, there’s still a chance for the deal to get worked out. Gus Hurwitz is a former attorney with the Department of Justice’s Antitrust Division and currently a research fellow at the University of Pennsylvania Law School’s Center for Technology, Innovation and Competition. He says, “The parties are right now going through a substantial and pretty contentious pre-trial motion phase where they’re in discussions with the judge over how many witnesses each side will be able to present at the time of the trial and other details like that and it looks as though both sides are really fighting it out, so this could be a really tough trial.”
When the trial is finally fought in February, Werbach says it will come down to “how competitive is the wireless market today and how sustainable is it? One of the arguments that AT&T and its supporters made for the deal was that T-Mobile is not sustainable as a competitor anyway, so this kind of consolidation of the market is going to happen one way or another. That’s an open question now. If the deal doesn’t go through, or if another approach needs to be taken, then we’ll see to what extent T-Mobile morphs into something else, or some other potential acquirer gets involved in the mix. Deutsche Telekom, which is the German company that’s the owner of T-Mobile, has already said they intend to get out of the market.”
So if you sign up for T-Mobile, your bill might not say AT&T on it in the long run, but it might not say T-Mobile either.
Also on today’s program, some researchers in Michigan are planning to turn beetles into cyborgs. The cyborg-beetles would use energy created by their animal selves to power the equipment strapped on to them with tiny backpacks. Also they’ll have brain implants that make them do our bidding. I don’t understand the world we’re entering into.
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