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Mergers & acquisitions

AT&T Takes the Oath on T-Mobile Merger

AT&T Inc. (NYSE: T) stands to gain a lot from its planned acquisition of T-Mobile US Inc. , but there will also be a lot it has to give up in order to make it happen. (See AT&T to Acquire T-Mobile for $39B.)

The presidents of the merging companies, Sprint Corp. (NYSE: S), Cellular South , Public Knowledge and Communications Workers of America (CWA) testified in front of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights to argue for or against the acquisition on Wednesday. (See Regulatory Scrutiny Escalates for AT&T/T-Mobile.)

And the CEOs took an oath of truthfulness beforehand, so the two hours that followed included a lot of semantics and carefully worded promises, especially from AT&T President and CEO Randall Stephenson. The AT&T chief acknowledged that divestitures would have to be made for the merger to pass, but did little to shed light on what those concessions may be.

The Senators did, however, try to wrest a few concrete promises from Stephenson about plans for life post-merger. Based on responses to pointed questions from the Congress members in attendance, Stephenson and T-Mobile CEO Phillpp Humm did confirm -- and delicately evade -- a few key points.

What Stephenson confirmed and what he sidestepped


  • T-Mobile customers will be offered their own rate plans in the future. AT&T customers will not be entitled to switch to T-Mobile plans.

  • If T-Mobile customers, pre-paid or contracted, get a new phone that's "comparable" to what they had previously, they will be able to stay on their current pricing plan.

  • Stephenson would not say under oath that pricing would come down, instead answering, "I can tell you that history has demonstrated these mergers have traditionally generated significant cost savings and benefits. ... Prices have consistently come down."

  • AT&T would accept, as a condition of the merger, a prohibition of using any Universal Service Fund (USF) money for its buildout of Long Term Evolution (LTE).
  • Humm said that T-Mobile does not expect a decrease in capital investment.

  • AT&T will, of course, open up LTE for roaming agreements.

  • Longer term, AT&T will have to reduce redundancies between it and T-Mobile's businesses, but Stephenson said that there will be an "elegant process" for doing so through a Job Offer Guarantee (JOG) program. The program is designed so that if there are overlaps in jobs, AT&T will find a growth area of the business where it needs to hire and provide an opportunity to interview there. He didn’t share any projections on expected job cuts or JOGgers.

  • Stephenson would not commit to ending AT&T's long history of exclusive handset agreements. He said that every carrier has them, and it's a means of getting to market quicker. The number of exclusive agreements may go down, Stephenson said, but he wasn't making any promises.

  • AT&T will commit to offer smaller wireless carriers compatible roaming agreements at reasonable rates. "Absolutely, it's the law," Stephenson said.


— Sarah Reedy, Senior Reporter, Light Reading Mobile

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