Asset Sale May Be Next for AT&T

The ambitions of AT&T and T-Mobile’s corporate parent, Deutsche Telekom, must be scaled back if they want any chance at a deal, analysts say.

To address the objections of the Justice Department and Federal Communications Commission that a merger would be anticompetitive, AT&T could agree to sell off 40 percent or so T-Mobile’s assets to wireless rivals, analysts say. The policy goal, analysts say, would be to strengthen wireless competitors beyond the big two, Verizon Wireless and AT&T. So sales of mobile spectrum, cell towers and customers could not be made to Verizon, but to others, like Sprint and MetroPCS, the third- and fifth-largest carriers. Or perhaps assets could be sold to a well-heeled foreign company that, unlike Deutsche Telekom, is increasing its investment in the United States: América Móvil, headed by the Mexican billionaire Carlos Slim Helú. (Slim is a major shareholder in The New York Times Company.) Creative deal-making, analysts note, would be required to forge alliances and supply cash for spinoff purchases. The list of potential participants, they say, includes private equity firms, like SilverLake Partners, and cable companies, like Comcast and Time Warner, which own spectrum and whose Wi-Fi networks can work in tandem with cell networks. Each of the options would present obstacles. And it is not clear that AT&T would be interested in a drastically scaled-down deal. Yet the company has consistently argued that its main motivation for pursuing T-Mobile is to acquire scarce wireless spectrum, so AT&T can quickly build out high-speed, next-generation network capacity to improve its service.

“If that is its goal, then AT&T has to explore ways to salvage as much spectrum out of the deal as it can,” said Kevin Werbach, an associate professor at the Wharton School of the University of Pennsylvania.