Deutsche Telekom's T-Mobile USA sale hits headwinds

Support for AT&T's proposed $39 billion acquisition of Deustche Telekom's T-Mobile USA unit appears to be weaker than previously thought, while the FCC has given itself more time to review information presented by AT&T in support of the bid.

In a Bloomberg report, a poll surveying 32 US analysts and industry observers says that sentiment toward the deal beign approved by regulators has slipped. Expectation that the sale would proceed was measured at nearly 55 per cent in July, but this has now dropped to 49.5 per cent this month. Also, eight observers have deepened their conviction that approval will not be given.

Those organising the poll suggested that the likelihood of AT&T succeeding may have been influenced by a call from the chairman of the US antitrust panel to block the deal.

In response, AT&T spokesman Michael Balmoris, said in a statement to Bloomberg that the company remained confident that it would obtain regulators' approval. "We have presented a detailed fact-based showing of the enormous benefits of this transaction, including the billions of dollars in badly needed investment, creating many thousands of well-paying jobs that are vitally needed given our weakened economy."

This potential for the deal to unravel comes as Deutsche Telekom (DT) sets about reshaping its organisation with a focus on revamping its European operations, together with savage cuts to its headquarters workforce who had responsibility for the company's US operations. If AT&T is unable to close the deal it will be forced to give DT cash, spectrum and roaming agreements worth a total of $6 billion.

Removing T-Mobile USA from its portfolio has become critical given the lengthy struggle DT has had attempting to grow the business, which accounted for almost 25 per cent of the German company's group revenue in the second quarter of this year. However, the US subsidiary has lost almost 1 million contract customers over the past 12 months, and subscriber churn has reached a new high at 2.4 per cent.

For more:
- see this Bloomberg article
- see this Atlantic article
- see this Wireless Intelligence article

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