AT&T's 'plan B' would leave T-Mobile as a competitor

Posted by Raven Lovecraft

New details are emerging about a plan that AT&T may resort to if it is ultimately unable to close the T-Mobile acquisition deal.

The carrier is, unsurprisingly, unwilling to just walk away if it can't get regulatory approval for the buyout. Instead, if all else fails, it may be able to form a joint venture with T-Mobile's parent company, Deutsche Telekom, without completely absorbing the major carrier.

By creating a joint venture, AT&T would be able to tap into T-Mobile's coveted spectrum in the US, but it would still be competing against T-Mobile over which customers are using that spectrum.

Details of this backup plan came to light from the Wall Street Journal, which cites "people familiar with the matter."

Under the buyout contract, AT&T said it would pay T-Mobile around $4 billion in cash and assets if regulators failed to approve the deal - a concession fee for ultimately wasting T-Mobile's time and hampering the company's ability to expand.

Even if the joint venture deal were to go through, AT&T might still be on the hook for that payout amount.

Other backup plans that are on the table include AT&T giving some of T-Mobile's assets to a US carrier called Leap Wireless, which would catapult it to a 'major carrier' status and replace the T-Mobile void, as well as AT&T promising to kill its outsourcing contracts and bring new jobs to the US.

But it seems every deal that would still ultimately result in AT&T and T-Mobile becoming one company is facing an increasingly serious threat of falling through. Both the US Department of Justice and the Federal Communications Commission have voiced strong opposition to the plan. AT&T will now have to defend the deal in federal court if it wants to be granted approval.