On the heels of U.S. regulators' kibosh on its proposed T-Mobile acquisition, AT&T is reportedly working to make significant concessions in the hope of avoiding time in court. At the same time, the carrier is also preparing for a tenacious legal battle to defend the controversial deal. Whatever the outcome, consumers and the wireless industry no doubt face turbulence ahead.
A Reuters report claims that sources close to the negotiations say AT&T is strongly committed to do everything possible to save its $39 billion merger scheme. Rumored to be on the table are promises not to alter T-Mobile's low-priced data subscription plans. For instance, a T-Mobile unlimited plan offers individuals a generous 5GB of 4G coverage plus unlimited voice and text at $90 a month. In comparison, a similar solution on Verizon sets customers back a hefty $140 per month.
AT&T certainly has plenty of incentive to diffuse the situation. The carrier would have to pay exorbitant fees to T-Mobile's parent company, Deutsche Telekom, to the tune of $6 billion is cash and other assets. Placating the government though will not be easy nor pleasant as AT&T may have to liquidate up to 25 percent of T-Mobile's operation to avoid monopoly concerns. If a settlement is reached, it may not bode well for current T-mobile subscribers as they may lose coverage area and support resources.
In the event that the merger is blocked, T-Mobile could lose out as well since the struggling carrier is in need of capital to compete with the big three networks (Verizon, Sprint, and AT&T). We'll have to see how things will shake out, but its bound to be a bumpy ride for consumers and industry players alike.