AT&T, T-Mobile, Deutsche Telekom Planning Joint-Venture if Acquisition Deal is Cancelled

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AT&T is planning to enter into a joint venture with the parent company of T-Mobile. The deal will reportedly involve sharing of network resources, in lieu of a straight acquisition if the $39 billion AT&T and T-Mobile merger deal does not push through.

AT&T’s proposed merger deal with T-Mobile is currently facing setbacks, with the Justice Department filing an antitrust complaint, and with the Federal Communications Commission seeking a judicial opinion on whether the deal will be ideal to the public interest. AT&T is already preparing to pay T-Mobile $3 billion in settlement fees if the merger is cancelled. But there might be a way for AT&T to secure the advantages it claims it will have, even without buying T-Mobile outright.

AT&T is reportedly planning to enter into a joint venture with Deutsche Telekom, T-Mobile’s parent company, for the sharing of network assets. While still in early stages of discussion, such a deal will help both AT&T and T-Mobile address the issue of wireless data capacity in the coming years as smartphones and data-capable tablet computers rise in popularity.

AT&T and DT will have to structure the deal such that T-Mobile still comes out as a viable competitor against AT&T, which will help mitigate the antitrust and public interest concerns. According to analysts, this can involve AT&T being allowed access to the broadband spectrum allocation that T-Mobile holds, but with T-Mobile still retaining its own subscriber base and pricing scheme. Meanwhile, AT&T and DT are likewise getting into discussions with smaller telcos to work out possible asset acquisition deals, which may enable to let AT&T acquire the core T-Mobile assets without resulting in a company that’s big enough to constitute antitrust.

But what does this mean for subscribers and consumers? AT&T and T-Mobile customers might expect better services, according to AT&T’s rationale behind the acquisition. But antitrust and oversight authorities think service pricing might not be competitive if the resulting merger or partnership were to become like a monopoly. Will network capacity sharing be in the best interests of consumers? And will this result in cheaper data plans and fees?