Analysts Say AT&T Will Have To Divest Part Of T-Mobile, Possibly To Sprint

The T-Mobile AT&T news just keeps on kicking with analysts from Citadel Securities proposing that not only would AT&T have to make major concessions for FCC and DOJ approval, that Sprint could wind up a major winner as part of any deal passage.

Citadel Security analysts are suggesting that AT&T executives are downplaying the scale that will be required in order to receive government approval.

“AT&T has said it expects to have to make some concessions to get regulatory approval, but its initial working assumption is that no divestitures will be required,” states the report. “We think this is likely an exaggeration, and that AT&T may, in fact, be ready to make very significant divestitures.”

AT&T’s Stock Purchase agreement filed on March 21st shows that the carrier is ready to divest up to 40 percent of T-Mobile’s subscriber base. It was suggested that AT&T may be prepared to divest even more than the suggested 40% in order to see this deal through.

“[T]he eventual outcome of this deal could be that AT&T does successfully acquire T-Mobile, but is required to divest perhaps up to half of T-Mobile’s subscribers,” stated the report. “We would view this outcome as positive for Sprint, which we believe would be a likely bidder for the divested operations. Although not as favorable as a straight Sprint/T-Mobile merger (at a fair valuation), Sprint’s ability to acquire some portions of T-Mobile would help it achieve better scale.”

Unfortunately, T-Mobile and it’s subscriber base will be the victims in all of this. Danish Research firm Strand Consult said in a report earlier today that T-Mobile USA was a victim of poor management from parent company Deutsche Telekom who “didn’t apply lessons they’d learned elsewhere to their American undertaking.”

Many of the problems T-Mobile was struggling with “could have been eliminated if they had just been a little better at identifying and utilizing the experience and information”—such as from carriers KPN and Telfort in Holland and E-Plus in Germany—”that they already had access to within their own international corporation,” the report said.

Going a step further, Strand Consult said in the report:

Deutsche Telekom’s American T-Mobile venture, the report concluded, “has been scrapped; those that ought to be held responsible for this sad turn of events will not be accused of anything, and the shareholders will once again realize that they have invested in a company that despite all their experience and knowledge could not perform.”

In the end, the FCC and the Department of Justice will determine just how much of T-Mobile AT&T will actually acquire and how much will be passed out to the competition.

eWeek

Tags: , , , , , ,

  • Guest

    ATT is not that bad. verizon is buckling on the iphone. they delayed their mifi becuase the network is burdened.

    ATT 3g is almost as fast as TMO. Do not worry about it. Think of all the free ATT to ATT minutes you will get.

    Gripping wont matter. The deal is done, son

    • DetroitTechnoFan

      ATT 3G is almost as fast as T-Mobile? WTF are you smoking?!

      In the same exact location, a pretty geographically central location, An HTC Thunderbolt from Verizon, an Apple iPhone from AT&T, and a Motorola Cliq from T-Mobile all run Speedtest…
      Who wins?

      Moto Cliq (T-Mo): ~4Mb/s
      Thunderbolt (VZ): 3.8 Mb/s
      iPhone (AT&T): 0.5 Mb/s

      Yeah, what now?

  • Guest

    Good point G. Now that I think of it many of my colleagues are ATT. My boss is. That will cut my need for min.

    Oh yeah!

    Bring on the globe of thunda!

  • mack

    You need to make a disclaimer for all these speculative articles. These are nothing but educated guesses by people who get paid way to much to be guessing!

  • 4G_or_not_4G

    Divest…Divest what, the only thing it this article seemed to say is AT&T may need to give up some customers…Like if AT&T cares, all they want is the T-Mobile network, so they can cannibalize the physical assets to get a jump on their LTE build out…They are not going to make a concession, they are going to boot us off by placing us on Edge, which is now an unacceptable technology.

  • JT

    I thought a major concern is the “consumers best interests” and maintaining “consumers choices” – now there’s these reports that T-Mobile customers will have their carrier choice DICTATED to them? Come on – this is totally unAmerican……create a monoply situation and then tell the customer what he/she can or can’t do?

  • 4G_or_not_4G
  • Techguy

    I’ve been working in this business for a decade now, and I just don’t understand this part. What does “divesting” really mean here? I understand they would likely have to give up some spectrum. That happens in almost every merger. However, how would divesting subs work? If they give them to Sprint, you can really force them to buy new phones. Would they give up their engineering and operations groups in those areas too? That wouldn’t make much sense. If it is just subs, then wouldn’t those subs likely just churn anyway? I’m completely confused by this part of the deal.

  • Levin49

    Please help and stop this merger by signing my petition. Thank you.
    http://www.change.org/petitions/stop-the-att-t-mobile-merger#?opt_new=f&opt_fb=t

  • Kendra

    Verizon and Sprint is going to spike up in customers. AT&T have screwed themselves again. Jan 2012 I will be a verizon customer.

    • http://pulse.yahoo.com/_COI3YDYIBRW35ORPCSXTXHE7FE Slim Cizzle

      agreed! assuming the rate plans are comparible…