AT&T, T-Mobile Mull Plan B

AT&T and Deutsche Telekom AG, the parent of T-Mobile USA, have discussed an alternative transaction -- forming a joint venture that would pool network assets from the two U.S. wireless carriers -- if their current acquisition deal falls apart, people familiar with the matter said.

These discussions aren't advanced and were described by the people as a plan the two companies have on the back burner. Still, the people added, AT&T and Deutsche Telekom are likely to take a closer look at a joint venture as AT&T's planned $39 billion purchase of T-Mobile USA faces mounting opposition. A joint venture could help solve some of the wireless-capacity constraints both companies are expected to face in the coming years while avoiding the competitive concerns voiced by the Justice Department. Much would depend on how the deal is structured and the details, but a proposal that left T-Mobile USA as a truly viable competitor might pass muster with the Justice Department. The nature of the joint venture that AT&T and Deutsche Telekom have discussed is unclear.

Analysts have suggested that under a joint venture, the two companies could jointly use the T-Mobile spectrum that AT&T covets while Deutsche Telekom holds onto its T-Mobile customers. It's unclear whether under such a scenario AT&T would still be on the hook for the full breakup fee -- including $3 billion in cash and spectrum with a book value of $1 billion -- that it agreed to pay Deutsche Telekom should regulators block the merger. At the same time, the nation's largest wireless carrier is in talks with smaller players to divest itself of some assets, including customers and spectrum, in hopes of satisfying regulators' concerns that the proposed deal will be anti-competitive. Such divestitures, ideally to one buyer, are intended to help build a stronger wireless player that could compete with the behemoths and preserve choice for customers.