Deutsche Telekom, AT&T review T-Mobile USA merger options

The fate  AT&T's of the proposed $39 billion acquisition of T-Mobile USA will likely be decided within the next five weeks, with AT&T and US Justice Department agreeing to stay all pending litigation over the deal while the companies evaluate their options.

AT&T and T-Mobile parent Deustche Telekom (DT) have dropped plans intended to secure fast-track legal approval for the merger, and are now considering whether to revise the merger conditions or admit defeat and walk away from the deal. The operators informed the US District Court earlier this week that they "wished to stay any further court proceedings" until Jan. 18 to allow the two companies "time to evaluate all options."

In line with this request, both firms said they would file a report by Jan. 12 describing the status of the proposed merger, and whether they intended to push ahead with the existing deal or proceed with another transaction.

The Justice Department joined in the motion and US District Judge Ellen Huvelle granted it. Huvelle had been expected to rule this week on a decision to postpone the start of the trial, which the DOJ had requested; the Justice Department is suing against the merger of AT&T and T-Mobile on antitrust grounds.

AT&T says that it remains committed to working with DT to find a solution, adding that the two companies were actively considering whether and how to revise the proposed transaction to achieve the necessary regulatory approvals. This latest move heralds a new phase for the troubled merger, with AT&T suddenly backing away from its statement of last week that it wanted to proceed with the trial and present its case in court.

This change in strategy will strengthen arguments made by industry analysts that the deal, which is also opposed by the FCC, the US wireless industry regulator, has little chance of succeeding in anything like its present form.

Meanwhile, according to a report in the Wall Street Journal, which cited unnamed sources, DT has looked at the possibility of merging T-Mobile USA with Leap Wireless, the sixth-largest US wireless operator. However, the German company warned that any discussions with other interested parties were tentative, emphasising that its agreement with AT&T required it to make its best effort to close the original deal.

The WSJ also claimed other potential buyers include satellite provider Dish Network and overseas companies. Another option thought to be under discussion is a joint venture between AT&T and DT that would combine the network assets of AT&T and T-Mobile USA.

For more:
- see this Financial Times article (reg. req.)
- see this WSJ article (sub. req.)

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