Report: Justice Department Moves to Block AT&T, T-Mobile Merger

[whitetigergrowl]

http://www.pcmag.com/article2/0,2817,2392186,00.asp

The Department of Justice has moved to block AT&T's purchase of T-Mobile, according to Bloomberg.

The government sued to block the deal in a Washington, D.C. federal court, arguing that combining the two wireless companies will "substantially lessen competition" in the market, Bloomberg said. Ultimately, the agency wants the court to also find that AT&T purchasing T-Mobile would violate U.S. antitrust laws and hand down a court order blocking the deal.

The news is developing; the DOJ has not yet issued a statement, nor has AT&T. Rival and merger opponent Sprint said it will have a statement shortly.

The DOJ's filing, meanwhile, comes as AT&T sent around a release committing to bring 5,000 call center jobs back to the U.S. should the T-Mobile deal close. The carrier also promised not to cut U.S.-based call center jobs for T-Mobile and AT&T workers who are on the payroll when the merger is approved.

The Federal Communications Commission, which is also reviewing the merger, has not yet issued its opinion on the deal. Last week, the agency re-started the clock on its review of the merger after halting it because AT&T decided to submit new models by which it would measure the effectiveness and benefits of a merger with T-Mobile.

In reviewing mergers, the FCC follows an informal 180-day clock to keep itself on track. The agency is not required to rule on mergers within those 180 days, but it generally aims to have things done before that clock runs out.

In recent months, members of Congress like Sens. Herb Kohl and Al Franken have encouraged the agencies to reject the deal, while Rep. Lamar Smith said the agencies shouldn't base their decisions solely on Congress.

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[Deke218]

Oh happy day! Oh Happy DAY!
Lets see if anything comes of this. I despise AT&T and would discontinue cell phone service totally if this merger happens. Go back to tin cans and string - still better than AT$T!

[AnthroMatt]

Oh happy day! Oh Happy DAY!
Lets see if anything comes of this. I despise AT&T and would discontinue cell phone service totally if this merger happens. Go back to tin cans and string - still better than AT$T!

Be careful what you wish for. DT obviously wants to unload TM...so one way or another TM will die.

[whitetigergrowl]

On a side note I just got a text message from AT&T wanting to give me 1000 Rollover Minutes. Needless to say I took it. The timing is interesting though. lol. I wonder how many other AT&T customers got the same text message.

[hampstenj]

Attention T-mobile there's a phone call from Dan Hesse on line 1....

really this does surprise me a bit that the DOJ would block this one, but it really is not a big shock either, at&t really screwed itself in the public eye with some of the reports that have came out since this deal was announced...

[veriztd]

On a side note I just got a text message from AT&T wanting to give me 1000 Rollover Minutes. Needless to say I took it. The timing is interesting though. lol. I wonder how many other AT&T customers got the same text message.

At&t probably saw this thread on HOFO and is trying to bribe you to keep quiet.

[i0wnj00]

Oh happy day! Oh Happy DAY!
Lets see if anything comes of this. I despise AT&T and would discontinue cell phone service totally if this merger happens. Go back to tin cans and string - still better than AT$T!

I question whether DT will continue to make investments to expand HSPA+ if the deal falls through considering that they're dead set in exiting the USA market.
Hopefully, a foreign operator will be interested in T-Mobile USA.

[awj223]

Be careful what you wish for. DT obviously wants to unload TM...so one way or another TM will die.

They could just do an IPO for TM, and spin it off as a public company. It wouldn't necessarily die in that case. In any case, I'd rather see TM either spun off or absorbed by MetroPCS/Cricket/MobiPCS than bought by AT&T. AT&T does not need TM to compete. I don't buy their whole "we need more spectrum" argument. First of all, the extra spectrum will come with extra customers and extra network load. Second, AWS and SMH spectrum can be bought from other companies holding licenses (not just TM) for cash, without buying out the companies themselves. And $30-35 billion or whatever it was that AT&T is planning to spend to acquire TM, can buy a LOT of licenses.

[bigsnake49]

They could just do an IPO for TM, and spin it off as a public company. It wouldn't necessarily die in that case. In any case, I'd rather see TM either spun off or absorbed by MetroPCS/Cricket/MobiPCS than bought by AT&T. AT&T does not need TM to compete. I don't buy their whole "we need more spectrum" argument. First of all, the extra spectrum will come with extra customers and extra network load. Second, AWS and SMH spectrum can be bought from other companies holding licenses (not just TM) for cash, without buying out the companies themselves. And $30-35 billion or whatever it was that AT&T is planning to spend to acquire TM, can buy a LOT of licenses.

I fully agree with you. DT can do an IPO and get out of the market. AT&T can purchase all the A&B band 700Mhz spectrum they want from rural utilities. In the cities, they can offload to WiFi or split their sites for capacity.

[reveries3]

Wouldn't the money that T-Mobile gets from AT&T from any failed merger situation possibly help DT keep it afloat?

[AnthroMatt]

They could just do an IPO for TM, and spin it off as a public company. It wouldn't necessarily die in that case. In any case, I'd rather see TM either spun off or absorbed by MetroPCS/Cricket/MobiPCS than bought by AT&T. AT&T does not need TM to compete. I don't buy their whole "we need more spectrum" argument. First of all, the extra spectrum will come with extra customers and extra network load. Second, AWS and SMH spectrum can be bought from other companies holding licenses (not just TM) for cash, without buying out the companies themselves. And $30-35 billion or whatever it was that AT&T is planning to spend to acquire TM, can buy a LOT of licenses.

Sure they could do that. Or the private investment company could just do what the Alltel owners did and find a different buyer.

TM cannot compete. If even Sprint is posting better subscriber numbers than you are each quarter, you are doomed. TM is doomed. It's only a matter of whether they last another 6 months or a few years.

[AnthroMatt]

Wouldn't the money that T-Mobile gets from AT&T from any failed merger situation possibly help DT keep it afloat?

$3 billion won't last very long unless DT decides to halt any and all capital expenditures.

[bigsnake49]

Sure they could do that. Or the private investment company could just do what the Alltel owners did and find a different buyer.

TM cannot compete. If even Sprint is posting better subscriber numbers than you are each quarter, you are doomed. TM is doomed. It's only a matter of whether they last another 6 months or a few years.

I don't believe that they are doomed. They can survive or even thrive, but they have to differentiate themselves. That used to be price, but they seemed to have abandoned that strategy. They need to finish building HSPA+ throughout their network and migrate their GSM customers over to 3G. They can then re-farm their PCS spectrum for HSPA+/LTE.

[huntm856]

Have to say I'm surprised the DoJ filed an antitrust suit in this case. Not that I disagree with it. But I just didn't see them stepping up given the historical generally pro-business regulatory climate surrounding the telecom industry.

[i0wnj00]

$3 billion won't last very long unless DT decides to halt any and all capital expenditures.

$3 billion still won't last long even without any CAPEX.
They still have to pay fixed costs for rent, salaries/wages, utilities, benefits, insurance etc..