AT&T talks to sell T-Mobile assets go cold

The Wall Street Journal reports: Talks on asset sales intended to help AT&T Inc. win approval for its acquisition of T-Mobile USA have gone cold, according to people familiar with the matter, the strongest sign yet that AT&T may abandon the $39 billion deal.

While AT&T could still try to fight the Justice Department in court, alternatives to a full-blown merger are looking more likely, the people said. Those options include AT&T's taking a stake in the smaller carrier or doing a joint venture to share network technology, they said.

These people cautioned that while a divestiture deal to get the acquisition done seemed increasingly remote, all options remain on the table.

AT&T, in the biggest deal struck this year, agreed in March to buy rival T-Mobile, in a bid to ensure it had enough rights to the airwaves to satisfy the wireless-data demands of smartphone-toting consumers. Germany's Deutsche Telekom AG, which owns T-Mobile, has said it wants to exit the U.S. market, where it has lost 850,000 contract customers this year.

The Justice Department sued in August to block the deal on antitrust grounds. To try to mitigate the government's concerns about the proposed merger's impact on competition, AT&T and Deutsche Telekom had been looking to sell off mainly T-Mobile USA assets to other wireless carriers, the people said.



They had been in serious discussions to divest assets worth more than 30% of the deal's value to Leap Wireless International Inc., the people added. Other potential buyers for T-Mobile assets include satellite-TV provider Dish Network Corp., cellular operator MetroPCS Communications Inc. and foreign buyers.

But the Leap talks recently faltered amid concern that even with such sales, the deal was unlikely to win over the Justice Department, the people said.

Retreat from the deal has been building in recent weeks. The two companies said last week they were putting the court fight with the Justice Department on hold to consider "whether and how to revise our current transaction."

Earlier this month at a pretrial hearing, U.S. District Judge Ellen Huvelle questioned why she should waste time with a fast-track trial, as AT&T had requested, when the company had withdrawn its merger application with the Federal Communications Commission.

Given the mounting obstacles and the distraction the uncertainty creates for both companies, AT&T is also studying whether to drop a tie-up all together, the people said. A decision could be announced before the end of the year, these people said.

AT&T could try to renegotiate the large fee—$3 billion in cash and spectrum rights with a book value of $1 billion—that AT&T would owe to Deutsche Telekom if the deal falls through, one of the people said, although it is unclear if such discussions are underway.



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