AT&T vows to keep pursuing T-Mobile merger

NEW YORK Wed Dec 7, 2011 2:15pm EST

CEO of Deutsche Telekom Rene Obermann is seen on a camera display during the annual news conference in Bonn February 25, 2011.  REUTERS/Ina Fassbender

CEO of Deutsche Telekom Rene Obermann is seen on a camera display during the annual news conference in Bonn February 25, 2011.

Credit: Reuters/Ina Fassbender

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NEW YORK (Reuters) - AT&T Inc (T.N) plans to forge ahead with its deal to buy Deutsche Telekom's (DTEGn.DE) U.S. wireless unit despite fierce regulatory opposition, and it has the financial resources to close the acquisition quickly, a top executive said on Wednesday.

"We continue to move forward with our efforts to complete the T-Mobile transaction...and we will continue to pursue the sale," AT&T Chief Financial Officer John Stephens said at the UBS media conference in New York.

AT&T plans to use the $10 billion cash it had accumulated on its balance sheet to prepare for the closing of the T-Mobile deal, Stephens said. In addition, the company has a $20 billion bridge facility and an $8 billion backup in place.

"So we clearly have an ability to close the deal very quickly and have those resources," Stephens said. "That is the plan."

The U.S. Department of Justice and the Federal Communications Commission oppose the merger, saying the combination of AT&T, the second-largest U.S. cellphone company, with T-Mobile USA, the fourth largest, would hurt competition.

Stephens would not say how the company planned to address antitrust concerns. He said any talks with the U.S. Department of Justice would not be made public.

The DOJ sued to block the deal in August, and that case is due to go to trial in February. AT&T said on November 24 that it would withdraw its deal application with the FCC so it could first focus on the antitrust case.

Asked if AT&T would lay out how its plans to address and remedy antitrust concerns at a status hearing on the DOJ's lawsuit on Friday, Stephens told Reuters the company planned to see "how it would play out."

According to media reports, AT&T and Deutsche Telecom had discussed such options as divestitures or forming a joint venture to pool network assets. But people familiar with the matter have told Reuters that the two groups were "still betting on victory" and that there was no Plan B.

Most analysts, as well as smaller rival MetroPCS Communications PCS.N, have said they expect the deal to fail. Stephens called the comments "inappropriate".

Stephens reiterated the deal was important for AT&T's customers and that it would help the company with its spectrum needs.

In a Consumer Reports survey, Dallas-based AT&T was named the worst U.S. carrier for a second year in a row.

Nevertheless, AT&T said its smartphone sales have been strong this quarter, with about 6 million sold through November. By comparison, it had sold 6.1 million smartphones in the entire fourth quarter of 2010.

AT&T also says more customers are upgrading their handsets than in prior quarters, in part reflecting those who were waiting for the new Apple (AAPL.O) iPhone, which launched in October.

The company's margins will suffer in the near term, however, as strong smartphone sales will translate to more subsidies, consistent with its earlier outlook. Telecom companies usually get this money back through long-term contracts.

AT&T shares were down 0.3 percent at $29.08 in afternoon trading.

(Reporting by Nicola Leske and Nadia Damouni in New York, Sayantani Ghosh in Bangalore; Editing by Hezron Selvi and Lisa Von Ahn)

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Comments (4)
socratesfoot wrote:
Capitalism requires competition…AT&T + T-Mobile = Epic FAIL – Not only shouldn’t they merge. Both AT&T and Verizon should be broken up!

Dec 07, 2011 3:49pm EST  --  Report as abuse
Nargg wrote:
@socratesfoot, you have no clue on capitalism. There are still a dozen other major cell carriers in the market AFTER the merger. You, like the DOJ are just nervous because it’s “AT&T”, which is NOT the company that was broke up from a monopoly decades ago. If AT&T didn’t buy T-Mobile, another competitor would. Then Verizon would have less competition, and become stronger which results the less capitalism. AT&T is the best choice for T-Mobile, it’s customers and all other cell phone users.

Dec 07, 2011 10:28pm EST  --  Report as abuse
When one looks at Verizon/MCI/Worldcom merger and what Verizon has done with that company, what ATT has done with BellSouth and its local and cellular businesses. The Consolidation of independent telecommunication companies in the US. And come to the conclusion that this deal will be better for everyone. That is my definition of a lobbyist. T-Mobile $4B goes a long-way, invest it and be more competitive within the US market.

Dec 08, 2011 2:44pm EST  --  Report as abuse
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