Over the weekend, AT&T, the nation's second-largest mobile carrier, announced plans to purchase T-Mobile, the nation's fourth-largest carrier, for a cool $39 billion. Consumers are in an uproar over the possible merger, which they say would create a "near-duopoly" in the wireless market between AT&T and Verizon. By gobbling up T-Mobile's 33 million subscribers, AT&T would have a customer base of more than 130 million. "We know the results of arrangements like this — higher prices, fewer choices, less innovation," says Gigi Sohn, a public interest advocate, as quoted at PBS. Will the Federal Communications Commission (FCC) and the Department of Justice greenlight this deal? (Watch an L.A. Times report about the deal)
AT&T wouldn't make a deal it thought regulators would nix: AT&T will likely have to make "significant concessions," but the word on Wall Street is that the deal will eventually pass, says Jennifer Valentino-DeVries in The Wall Street Journal. "AT&T wouldn't try a purchase it thought would fail," and the telecom giant has signaled further confidence by agreeing to pay a $3 billion "cash break-up fee" if the deal doesn't go through.
"Analysts' views: Will AT&T deal get by regulators?"
And the political climate is favorable: A year ago, with Democrats controlling both the Senate and the House, this deal would have been "unthinkable," say Jeffry Bartash and Virginia Harrison at MarketWatch. But the flailing economy and Republican gains in November have changed the political landscape. Republicans won't be too opposed to the merger, President Obama is fearful of being seen as "anti-business," and many lawmakers never liked the fact that T-Mobile USA is owned by a German company, Deutsche Telekom.
"AT&T deal raises competition concerns"
This is hardly a sure bet: AT&T may have a well-conceived strategy to get this deal by regulators, but that may not be enough. They'll have to make some "massive divestitures and concessions" to get this deal through, says Jonathan Chaplin, a Credit Suisse analyst, as quoted at The Wall Street Journal. "We have never seen a deal with more regulatory risk be attempted in the U.S." So don't count your chickens just yet.
"AT&T/T-Mobile tie-up: 'Never seen a deal with more regulatory risk'"