I spent a large part of yesterday talking to friends and colleagues in the mobile tech industry. As you’ve probably guessed, the hot topic was the Justice Department’s lawsuit to block AT&T’s acquisition of T-Mobile. Everyone I spoke to agreed that most people were taking the news of the lawsuit the wrong way; just because the Justice Department is suing, doesn’t mean that the deal is dead. However, opinions were split on how this is all going to pan out. Let’s look at a few of the possibilities.
The most popular scenario is that the acquisition goes through, but with AT&T having to make more concessions than originally planned. People that expressed this opinion believe that the lawsuit is just a tactic to weaken AT&T’s stance. Some believe that AT&T’s lobbyists (and the money behind them) are too powerful for the deal to completely die.
Number two on the list is that T-Mobile ends up with another company. While several people mentioned this possibility, the proposed partners were all over the place. Dream suitors mentioned include Sprint, Google, Cox Cable, Comcast, Time Warner Cable, and Cablevision. The one issue with this scenario is that nobody thinks that T-Mobile can get anything close to the $39-billion offered by AT&T. Will Deutsche Telekom be willing to take a deal for significantly less money?
Oddly enough, the least popular possibility was T-Mobile giving it another go on its own. Some of you will remember that if the AT&T acquisition falls through then T-Mo receives a cool $6-billion — $3-billion in cash plus $3-billion in spectrum and roaming rights. While that’s a significant amount of money and assets, my pundit pals believe that it’s not enough to keep T-Mobile going. The company has been losing customers and is already less valuable than it was when the acquisition was announced. At best, my friends believe the children are our future that T-Mobile’s consolation prizes will be used to increase the price to its potential buyers.
As for me, I’m going with the first possibility. I think that the acquisition still goes through. The honest reason is that I don’t expect the government to do what’s right for American consumers. I’ve been conditioned to believe that money and special interests will trump doing the right thing. Am I being cynical? Certainly. Am I being irrational? I don’t think so.
What do you think of all this? How do you think the The Justice Department vs. AT&T will shake down?
I think they are a few people that want to do good for everyone, but when that lobby money hits the account and their family and kids are set, everyone doesn't matter.
I would have to agree with you on this one. Everyone in my family and all of my friends know me as being one of the most cynical people they know. The government doing the right thing for consumers is a joke that went out of style decades ago. Lobbyists with deep pockets ensure this continues.
Rick Perry supports the merger! Of course AT&T has given $500,000 over the last decade, so it's easy to understand why.