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AT&T and T-Mobile Completely Unimpressed With Each Other, but Would Still Love to Go Forward With $39 Billion Acquisition

When I was a practicing lawyer, I always found one part of the class action settlement process to be kind of amusing. That was the part where, after the parties agreed to, say, a $25 million settlement and submitted it for court approval, the plaintiffs' law firm (which to date had shown nothing but 100 percent confidence in its case) must now turn around and argue against its own case to show the judge that it had not settled the case for too little. As in, "$25 million is fair because the court has already dismissed most of our claims, and we may have a statute of limitations problem, and even if we litigate for years we might well get nothing, and it will cost us a fortune to continue, and the defendants might go bankrupt" and so on.

The M&A equivalent of this intricate dance appears to be going on in AT&T's effort to acquire T-Mobile. As the Law & Disorder blog observes, AT&T filed a massive document with the Federal Communications Commission last week, arguing that AT&T should be allowed to acquire T-Mobile for $39 billion because, well, T-Mobile is a pretty unimportant company with uncompelling products and service.

L&D highlights the following snippets from AT&T's description of T-Mobile:

  • "T-Mobile is not an important factor in AT&T’s competitive decision-making."
  • "As a standalone company, however, T-Mobile USA would continue to face substantial commercial and spectrum-related challenges. It confronts increased competition from industry mavericks such as MetroPCS, Leap, and others; its percentage of US subscribers has been falling for nearly two years; and it has no clear path to LTE."
  • "T-Mobile USA, in contrast to others, does not have a differentiated network position. T-Mobile USA has admitted that it suffered from its late transition to a 3G network, and unlike Sprint, which first promoted a 4G network, T-Mobile USA’s HSPA+ launch appears to have been lost among other carriers’ 4G messaging."
  • "AT&T does not believe that T-Mobile USA has a particularly compelling portfolio of smartphone offerings as compared to AT&T, Verizon, and Sprint."
  • "To the extent that T-Mobile USA’s prices are lower than those received by AT&T and Verizon Wireless for otherwise comparable subscribers, T-Mobile USA’s lower prices have not stimulated growth in its share of retail subscribers. This indicates that other aspects of T-Mobile USA’s service are in some way lacking."

You may have also noticed lately that T-Mobile does not think all that much of AT&T. Prior to the announcement of AT&T's bid for T-Mobile, T-Mobile launched a series of ads (that are still running quite often) lampooning AT&T's service and offerings. Here is one of T-Mobile's many ads from the ongoing campaign that makes fun of AT&T:


Posted by Bruce Carton on April 26, 2011 at 04:47 PM | Permalink | Comments (0)


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