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AT&T may make Deutsche Telekom joint venture if merger fails

updated 06:00 pm EST, Wed November 30, 2011

ATT may talk to DT for frequency deal

AT&T has raised the idea with T-Mobile's parent Deutsche Telekom of a network joint venture if the now doubtful T-Mobile merger isn't approved, insiders divulged Wednesday. The two are purportedly in early talks that the Wall Street Journal understood would see them share parts of each other's network, even as they ran separate competitive businesses. The deal is considered a "back burner" option but was gaining momentum as resistance grew to the merger.

According to the tips, AT&T was still convinced it had a "reasonable chance" at beating the Department of Justice lawsuit and wouldn't need to consider a joint venture. It was still looking to try a last-ditch attempt at divesting some of T-Mobile's network to competitors, such as Leap, in hopes that regulators would see it as sustaining smaller competitors.

Other options might include guaranteed price freezes or even giving away network pieces where T-Mobile didn't have as much of a presence.

The merger's chances are so far slim, as both the DOJ and the FCC have expressed views that suggest no amount of concessions could compensate for the elimination of T-Mobile, the only major GSM alternative in the country. In its promised public report (PDF), the FCC found flaw in most aspects of AT&T's claims, saying that the merger would lose jobs, stack the industry too heavily in favor of the two largest carriers, and wasn't needed for AT&T's LTE coverage goals.

A joint venture could undermine the case further by showing that a full takeover wasn't necessary to address the network coverage problems AT&T claims to have, since it could just let customers roam on T-Mobile's network in areas where coverage or capacity is a problem. Such deals are normally meant to reduce or eliminate the roaming costs and could achieve some of the same effect.

Neither side has offered a response to the rumor.

by MacNN Staff



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