Deutsche Telekom Accidentally Speaks Truth About T-Mobile Having A Future Without AT&T

[Commentary] Two weeks ago, in Germany, Deutsche Telekom (DT) Chief Technology Officer Olivier Baujard accidentally spoke truth about T-Mobile to an audience of German investment analysts. After running through the usual company talking points about the effort to sell T-Mobile to AT&T (e.g., it will happen, DoJ is just playing hardball with negotiations, etc.), Baujard said at a public presentation at a Paris broadband conference that: “any rational company had a Plan B and that Deutsche Telekom had other opportunities for its U.S. operations should the U.S. Department of Justice succeed in terminating the deal.” This truth was so terrible and potentially damaging that it prompted an immediate retraction from DT, apparently on the theory that it is better to look like an irrational company with no plan than to admit that T-Mobile is a valuable company with a lot of options about the future. Mind you, because of laws that make it illegal to outright lie to investors, DT could not simply say Mr. Baujard was lying or mistaken. Instead, they stated that Mr. Baujard “is not involved in the decisionmaking process” and generally “unfamiliar” with the details of the future of T-Mobile and that DT still believes AT&T acquiring T-Mo is the “best” outcome. But DT did not (and, indeed, could not) say Mr. Baujard was wrong and that DT does not have other options in mind for T-Mobile. All of this inconvenient truth leaking out of DT like sieve raises some interesting questions here at home.

First, why the heck doesn’t anybody notice? It’s not like these statements are coming out of some secret document horde, like when AT&T accidentally acknowledged that they did not need T-Mo to bring 4G wireless broadband to rural America. DT officers are making these statements publicly! So why do AT&T and its chorus of supporters still sing the “T-Mo Is A Sickly Gazelle and only AT&T can put it out of its misery” song unchallenged?

Second question: why is AT&T willing to pay $11 billion more than the IPO value of T-Mobile? After all, an estimated IPO value is what one assumes the fair market value of the company to be. If the IPO value is estimated at $28 billion, AT&T is willing to pay an $11 billion premium for — what? Don’t tell me “spectrum.” AT&T could acquire needed spectrum access rights far more cheaply through commercial roaming agreements. And, as already noted, AT&T previously conceded they could bring 4G to rural America much cheaper without acquiring T-Mo. Where do you get $11 billion worth of “efficiencies” without firing boatloads of people and using your new-found market power to exact monopoly rents?