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AT&T will soon present a plan to the Justice Department to save its proposed $39 billion purchase of T-Mobile, which is said to involve some major concessions on AT&T’s part, Reuters reports.
The carrier has to make clear to the U.S. government why the merger is necessary, and the concessions should help to allay antitrust fears. If the deal falls through, AT&T will owe T-Mobile parent company Deutsche Telekom some $7 billion in cash, spectrum and services as a breakup fee.
While actual details of the solution remain a mystery, the carrier is expected to promise that it will continue offering T-Mobile’s inexpensive subscription plans and devices. It may also have to sell up to 25 percent of T-Mobile’s business, including customers and airwaves, to make the merger seem like less of an antitrust concern, two anonymous sources told Reuters.
“AT&T is pretty determined that they can find a solution, and they are pretty confident,” one of the sources said.
The U.S. government threw a major wrench into AT&T’s plans on Wednesday by suing to block the merger on antitrust grounds. “AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the DOJ wrote in its filing.
Reuters notes that the judge randomly selected for the hearing, U.S. District Judge Ellen Segal Huvelle in Washington D.C., is known for her speedy rulings. AT&T has asked for an expedited hearing, and a source says the case will head to court within two months.
AT&T and Deutsche Telekom have plenty of legal muscle in their corner to argue for the deal. AT&T’s lead attorney is Richard Rosen of Arnold & Porter LLP, who spearheaded Cingular’s $41 billion purchase of AT&T Wireless and was at one point head of communications at the DOJ’s antitrust division. DT has hired George Cary, an antitrust star who helped the FTC fight against Staples’ merger with Office Depot in 1997.
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