Dish Has Agreed To Buy Boost Mobile

Dish has reportedly struck a deal with T-Mobile, to divest some of its spectrum and Boost Mobile to the satellite provider Dish, in order for the Justice Department to approve of its merger with Sprint.

The Justice Department needs to sign off on this deal, before it can be approved and before the merger with Sprint can be approved. This report comes out of CNBC, who has a pretty good track record with telecommunications reports. 

The Justice Department still needs to decide on whether Dish would represent meaningful competition to T-Mobile, Verizon, and AT&T following the $26 billion merger between T-Mobile and Sprint.

Dish already has spectrum from different spectrum auctions over the past decade. If there is a company that could become a meaningful competitor to the existing wireless carriers, Dish would be the one in mind. T-Mobile and Sprint have already agreed to sell Boost Mobile to get this deal done, and the DOJ also wants it to sell some of its own spectrum.

T-Mobile wants to limit Dish's spectrum capacity to around 12.5 percent. Meanwhile, Deutsche Telekom wants to limit any strategic Dish investor to 5 percent.

This to make sure that T-Mobile and Deutsche Telekom aren't spending $26 billion to be left in the same spot they are in now. In distant third place behind the top two US carriers. The whole reason for the two to merge was to be able to better compete with top carriers, both of which are nearly three times the size of T-Mobile now. The combined T-Mobile and Sprint, would still be smaller than the top US carriers.

The Justice Department has a few things that it wants done before it can approve this merger between T-Mobile and Sprint. One major caveat is to make a fourth, viable, wireless carrier. Which would be the point of selling spectrum to Dish as well as selling Boost Mobile. 

Dish being the perfect buyer, giving it has spectrum that it needs to start deploying, before the FCC starts fining Dish and has been wanting to get into the wireless industry for many years.


Source: CNBC

Department Of Justice Clears Softbank-Sprint Merger

The SoftBank-Sprint merger is almost official. Despite the recent news that SoftBank has been in talks with DeutscheTelekom to set up a backup plan to purchase T-Mobile US if the deal with Sprint went south, it looks like this deal is going to go through. The Department of Justice has cleared the SoftBank-Sprint merger to continue. 

The DOJ had asked the FCC to hold off on making a decision, so the deal could be investigated, but everything is looking good. So, that means the only thing left is for the FCC to approve the merger of course, the competing bid from Dish could still cause problems with the deal. 

Source: FCC

AT&T to Offer Bigger Asset Sales to Save Takeover

AT&T Inc., with its T-Mobile USA takeover facing regulatory opposition, is preparing the biggest remedy proposal yet to the Justice Department to salvage the $39 billion deal, according to a person familiar with the plan.

The company is considering an offer to divest a significantly larger portion of assets than it had initially expected, said the person, who declined to be identified because the plan isn’t public. Though the exact size of the disposals hasn’t been determined, they could be as much as 40 percent of T-Mobile USA’s assets, the person said.

The asset sale is an attempt to address the concerns of the Justice Department, which sued to block the takeover on Aug. 31, saying the deal would “substantially lessen competition” in the wireless market. The acquisition was dealt another blow on Nov. 22, with the Federal Communications Commission signaling an attempt to block it.

“It’s going to be problematic for AT&T to find a successful divestiture solution,” said Kevin Smithen, an analyst with Macquarie Securities USA Inc. in New York. The pool of potential buyers isn’t very big and those that might be interested probably wouldn’t have a chance, Smithen said. “It’s unlikely that the DOJ would allow a big competitor like Verizon to purchase the assets,” Smithen said.

Customers Versus Spectrum

ATT’s proposal is likely to include the divestiture of a higher share of customers and lower percentage of spectrum, said the person familiar with the matter. The company needs more capacity to serve users as it adds customers and more of them adopt data-intensive smartphones.

AT&T, based in Dallas, fell 0.5 percent to $27.41 yesterday in New York and has lost 6.7 percent this year. T-Mobile owner Deutsche Telekom AG added 1.6 percent to 8.83 euros in Frankfurt and has declined 8.6 percent this year.

Brad Burns, an AT&T spokesman, and Andreas Fuchs, a Deutsche Telekom spokesman, declined to comment.

The asset-sale proposal, which could come as early as the next Justice Department hearing on Nov. 30, might be the only remaining option if the second-largest U.S. wireless operator wants to avoid a lengthy court battle in its bid to become the country’s top mobile carrier. The purchase may vault it past Verizon Wireless, depending on the size of the divestitures.

On Nov. 24, AT&T and Deutsche Telekom asked to pull their deal applications to the FCC so the companies could better focus on the Justice Department lawsuit. AT&T also said it would take a one-time charge of $4 billion to cover the breakup fee it will need to pay to Deutsche Telekom if the deal fails.

‘All or Nothing’

One approach is to propose a remedy that would lessen the market impact of losing the fourth-largest wireless service provider. AT&T has been in discussions with MetroPCS Communications Inc. and Leap Wireless International Inc. to sell spectrum and customers as a way of propping up competition in the absence of T-Mobile.

The second approach is to fight the court case, which is scheduled to begin Feb. 13.

“If there were a last, best offer to be made, they would have made it a long time ago,” said Craig Moffett, a Sanford C. Bernstein & Co. analyst in New York, who has a “market perform” rating on AT&T shares. “It’s very hard to envision a solution that would satisfy the problems the DOJ found with the deal. Realistically, AT&T is going to take its chances in court in February. It’s all or nothing.”

According to a term in the agreement, AT&T would be able to pay less than the deal’s original $39 billion value if regulators demand asset sales that surpass 20 percent of that figure, or about $7.8 billion, three people with direct knowledge of the situation said Sept. 7.

AT&T could walk away from the deal and pay Deutsche Telekom a breakup fee if the concessions requested top 40 percent of that value, the people said. If the deal doesn’t happen there’s no way AT&T can avoid paying the breakup fee, the people said.

AT&T/T-Mobile Deal Starting to Crumble?

Today is looking like a happy Thanksgiving for Dan Hesse. AT&T has formally withdrawn their application from the Federal Communications Commission to acquire T-Mobile. Instead both AT&T and T-Mobile USA’s parent company Deutsche Telekom have decided to move their focuses towards fighting the Department of Justice’s ongoing antitrust lawsuit.

This move makes sense, considering that FCC approval is practically pointless if AT&T and Deutsche aren’t able to obtain approval from the DOJ. In addition to withdrawing their FCC application, AT&T reaffirmed that they would incur a $4 billion charge if the deal were to go sour. As it stands AT&T is also expecting to take out a pretax charge for the $4 billion sometime before the end of this year.

AT&T prepping to pay $4 billion to T-Mobile

                                  

When AT&T announced their intent to buy T-Mobile in March of this year, we freaked out. The United States needs more competition in the wireless space, not less. Everyone started complaining about the deal, with Sprint being incredibly vocal about the consequences of the government approving the deal. Earlier this week FCC Chairman Julius Genachowski said he doesn’t think the merger will be of any benefit to the American people. He wants to give both companies an opportunity to tell the FCC why they think he’s wrong however, though the meeting he’s proposed still has to be approved by other members of the FCC staff before it can take place. Here’s where things get interesting: AT&T has just announced that they’ve withdrawn their application for the planned T-Mobile merger from the FCC. More importantly, in May it was discovered that if AT&T failed to get the OK from the government to gobble up T-Mobile, they’d have to give them up to $3 billion in cash, $2 billion worth of spectrum, and a guaranteed roaming agreement worth around $1 billion.

And guess what AT&T just did? They’ve recognized a pretax accounting charge for $4 billion ($3 billion cash and $1 billion for spectrum) on their Q4 2011 accounting sheet. While that isn’t exactly confirmation that the deal is dead, both companies are still hoping they can work something out, it’s pretty safe to say that the deal as we thought it would go down back in March is not going to happen. What T-Mobile plans to do with that money is also up for debate because Deutsche Telekom was really looking forward to pocketing $39 billion from AT&T and then pouring it into their aging European networks. Guess they might have to change their mind.

If you’re a T-Mobile customer, you should be really happy right now. Again, the deal isn’t officially dead, but it’s damn near close. And if you’re on AT&T … look forward to seeing your bill get a tiny bit more expensive so that AT&T can recoup their losses.