AT&T's Stephenson: T-Mobile deal likely will require divestitures

AT&T (NYSE:T) CEO Randall Stephenson said the company likely will be forced to divest some assets in its bid to acquire T-Mobile USA for $39 billion, an admission that coincided with his full-throated defense of the deal. 

AT&T (NYSE:T) CEO Randall Stephenson"We anticipate there will be some markets we will have to divest," Stephenson said in an interview with the Wall Street Journal. Stephenson said it is too early to discuss whether there might be any conditions put on the merger beyond divesting assets, and he declined to talk about which markets might be divested.

Verizon Wireless (NYSE:VZ) CEO Dan Mead has expressed interest in potentially acquiring assets AT&T might be required to divest. Indeed, AT&T in 2009 spent $2.35 billion to buy a large portion of the assets rival Verizon Wireless was required to divest as a condition of its acquisition of Alltel.

When AT&T announced its plans to purchase T-Mobile March 20, Stephenson said AT&T believed that no concessions would have to be made--but he conceded that divestitures are common in such deals. AT&T's proposed purchase of T-Mobile faces challenges from public interest groups, several state attorneys general and Sprint Nextel (NYSE:S), which has vowed to try and block the deal.

Stephenson also disputed the idea that prices will rise if the deal goes through. He said he doesn't think it's necessary to bring price controls to the combined network, noting he is "not sure it's relevant" since data costs have declined over the past several years.

AT&T executives also argue the transaction will result in more efficient use of the nation's scarce spectrum.

"This merger will more quickly create the spectrum efficiencies that we need to sustain demand and it will free up more spectrum well in advance of the reallocation of spectrum that the government is working on," said Jim Cicconi, AT&T's senior executive vice president of legislative and external affairs, at a forum on spectrum held in Washington, D.C.

For more:
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Broadband Breakfast article
- see this Reuters article

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