AT&T T-Mobile Deal Settlement Could Lead to Spectrum Fire Sale

Boston, MA - September 7, 2011 – Strategy Analytics predicts that the AT&T T-Mobile US acquisition can still be completed, as long as AT&T divests appropriate spectrum and persuades Deutsche Telekom to be patient. 

The Strategy Analytics Wireless Operator Strategies (WOS) service analyzed AT&T actions which could satisfy the Department of Justice (DoJ) in order to get approval for the T-Mobile acquisition.

“The recent DoJ intervention to block the acquisition represents a return to pre-2000 antitrust enforcement,” noted Sue Rudd, Director, Service Provider Analysis at Strategy Analytics. “The DoJ review of the AT&T T-Mobile acquisition may be compared to the 2000 GTE Verizon deal which took 23 months to complete and required many DoJ-requested modifications. AT&T still has strong national competition. The potential problems are in specific Cellular Market Areas (CMAs).”

In the report, “AT&T and T-Mobile: Will there be a Spectrum Fire Sale to Escape Department of Justice and Close the Deal?” Strategy Analytics reviewed:

• Spectrum holdings of AT&T and T-Mobile;
• Spectrum required by AT&T to achieve 4G plans while maintaining 3G networks; and
• Spectrum likely eligible for divestiture.

“This DoJ intervention makes it nearly impossible for AT&T to meet the March 2012 deadline with Deutsche Telekom,” commented Phil Kendall, Director, Strategy Analytics Wireless Operator Strategies (WOS). “Deutsche Telekom will need to be persuaded to waive its penalty clause or at least to extend the date. This is probably still the best deal they can get for T-Mobile US.”

The DoJ highlighted major markets where AT&T will likely have to sacrifice spectrum, including Dallas, Houston, Oklahoma City, Birmingham, Honolulu, Seattle and some smaller CMAs. Smaller operators—Sprint, MetroPCS, Leap Wireless, US Cellular and even Dish Network—could pick up a good bit of this AT&T spectrum at fire sale prices.