The Justice Department is suing to stop AT&T’s proposed acquisition of T-Mobile, which would have consolidated three-quarters of cellphone-plan market into the hands of two companies. I have to say I didn’t think they had it in them.
The skeptical press coverage given the deal’s announcement certainly didn’t hurt, nor did later coverage like stories from the Washington Post and Politico exposing how nonprofits like the NAACP and GLAAD sold out to back the deal. Thanks to Politico, for instance, we know AT&T’s charitable foundation is headed by its chief lobbyist, which is pretty darn cynical.
Which raises a question: How do you get to the point where a $160 billion company thinks its a good idea to have its chief lobbyist run its charitable giving?
Does it have anything to do with the hubris required to push a deal so clearly anticompetitive that it prompted a Wall Street analyst to say this:
“It is unlikely that AT&T would attempt a deal that they knew would fail; however, we can’t see how they would get this through without massive divestitures and concessions,” Jonathan Chaplin, an analyst at Credit Suisse Group AG in New York, said in a note. “We have never seen a deal with more regulatory risk be attempted in the U.S.”
If the deal fails, as seems likely now, AT&T will have to pay T-Mobile $3 billion in cash and up to another $3 billion in wireless spectrum and “favorable” deals. Six billion dollars is about 15 percent of Deutsche Telekom’s entire market cap—a crazy amount of money.
If the deal fails, as seems likely now, it will surely cause widespread ass-covering, blame-shifting, and perhaps even turmoil in the C-suite at AT&T, which is great for reporters. I’d certainly like to read a deep dive on what AT&T was thinking.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.