Fitch tips T-Mo merger to proceed
The benefits to Deutsche Telekom of selling T-Mobile USA to AT&T are likely to be heavily reduced as a result of the US Department of Justice (DoJ) seeking a block on the deal, Fitch Ratings warns.
While the credit rating agency still expects the merger to go ahead, it predicts heavy compromises will be necessary to gain DoJ approval. Those concessions will limit the improvements to T-Mobile’s operations in the US, making it less likely the agency will upgrade Deutsche Telekom’s credit rating from its current triple B+ mark.
The DoJ last week sought to put the stoppers on the merger by filing a lawsuit against AT&T. It argues the deal should not go ahead because it would leave just three players controlling 90% of the US mobile market, and stifle innovation.
Despite the uphill battle now facing AT&T and Deutsche Telekom, the ratings agency believes the pair remain committed to the transaction and will “agree on significant remedies” to ensure it goes ahead.