Report: AT & T, T-Mobile Deal May Drag On for 18 Months

Wed, 04/06/2011 - 7:59am
Maisie Ramsay

AT&T expects to complete its $39 billion acquisition of T-Mobile USA in 12 months, but a new report suggests the deal may take considerably longer to close.

Research firm Strategy Analytics predicts that it will take at least 18 months for the deal to close, a third more than the estimate provided by AT&T and T-Mobile.

The deal is being opposed by Sprint and has already come under scrutiny from lawmakers. If regulators approve AT&T's purchase of T-Mobile, the company would become the largest wireless operator in the country and give AT&T and Verizon Wireless a near-duopoly hold on the U.S. wireless market.

The merger must pass hearings in the House and Senate; state-by-state regulatory and Attorney General inquiries; investigation from the Federal Trade Commission and Department of Justice; and final approval from the FCC.

Though federal scrutiny of the acquisition has attracted the most attention so far, Strategy Analytics analyst Sue Rudd says the state inquiries could be the biggest hurdle for the deal.

"If a lot of states weigh in here – and we're already getting requests for state-level detail on competitive market share – there are going to be a lot of state regulators on this," she says, adding that regulators, lawmakers and wireless industry stakeholders are "going to play a lot of delaying tactics."

T-Mobile declined to comment on Strategy Analytics report. AT&T also declined to comment beyond its prior statements that the deal was expected to close within 12 months, during the first quarter of 2012.

A prolonged approval process is unlikely to have much of a financial impact on AT&T or T-Mobile, but could put extra demands on the companies' senior management and may create uncertainty for investors. AT&T has agreed to pay T-Mobile parent company Deutsche Telekom $3 billion if the deal fails to close.

A delay in the acquisition's approval could also make it difficult for T-Mobile customers to decide whether they should upgrade to a new smartphone, since some of those devices will have to be replaced as the two operators integrate their network operations. Some subscribers have already voiced concerns about the issue, but it could be years before the devices will have to be replaced.

Last week, state Attorney Generals from New York and Connecticut said they planned to review the acquisition. The officials are concerned that the merger could prove anticompetitive and result in higher prices on wireless service for their constituents.

AT&T maintains the deal will result in better service for both its customers and T-Mobile's subscribers.



Share this Story

You may login with either your assigned username or your e-mail address.
The password field is case sensitive.