AT&T and T-Mobile merger blocked by Justice Department (USA)
The U.S. Department of Justice (DoJ) has filed a lawsuit to block the acquisition of T-mobile, a unit of Deutsche Telekom AG (DTE), by AT&T. Sources claim that Sharis Pozen, acting head of the Justice Department’s antitrust division, believes that unless the merger is blocked, competition and innovation will be reduced, and consumers will suffer.
The DOJ has reportedly stated that the proposed $39 billion transaction would substantially lessen competition for mobile wireless telecommunication services across the United States, resulting in higher prices, poor quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives. In the event that the acquisition takes place, AT&T would displace Verizon Wireless, which is owned by Verizon Communications Inc. and Vodafone Group Plc, as the No. 1 U.S. wireless carrier.
Reports suggest that Dallas based AT&T plans to fight the lawsuit in court, stating that the deal would let it add capacity and meet demand for high-speed wireless service. However, industry insiders say that there is little scope for the Justice Department to agree on a settlement allowing the acquisition to take place. In case the deal does not follow through, AT&T would be liable to pay Deutsche Telekom a cancelation fee of $3 billion in cash, along with providing T-Mobile USA wireless spectrum and reduced charges for calls into AT&T’s network, a package valued at approximately $7 billion.
Sprint asks the US govt to block T-Mobile acquisition (US)
Sprint Nextel Corp has stated that AT&T’s takeover of T-Mobile is anti-competitive and would harm consumers, reversing nearly three decades of actions by the US government and the courts that modernized and opened US communications markets to competition.
According to Charles McKee, a Sprint Vice President of government affairs, they think the anticompetitive nature of the transaction simply will not allow it to pass. This is really an important transaction to stop.
As per Sprint, the industry would be dominated by two carriers, the combined AT&T-T-Mobile and Verizon Wireless. As per AT&T’s previous statement, it agreed to buy T-Mobile from parent Deutsche Telekom AG, pending government approval. The deal would combine the second- and fourth-largest U.S. wireless providers.
As per sources, Sprint had also held talks with Bonn-based Deutsche Telekom to buy T-Mobile this month. McKee declined to say whether Sprint had held discussions with T-Mobile over a possible merger.
McKee stated that Overland Park, Kansas-based Sprint would voice its objections throughout the regulatory process, which AT&T stated could take 12 months.
Deutsche Telekom,France Telecom plan network combinations (Germany, France)
Germany’s Deutsche Telekom AG and France Telecom may reportedly combine their networks in Austria and Romania to save costs.
According to company’s spokesperson, they are looking at every country, also Romania and Austria. They are not only talking to France Telecom but also to other competitors there.
These companies had announced a few weeks ago that they will build a mobile network in Poland. The newspaper cites sources as saying that savings of “several hundred million euros” are planned by 2015.
Sprint shares come down to $4.49 post T-Mobile, AT&T deal (US)
Sprint Nextel Corp.s’ shares have gone down following AT&T Inc.’s $39 billion offer for T-Mobile USA.
Sprint came down by 11% to $4.49 since the T-Mobile USA deal was announced on March 20.This signals that investors can buy Sprint for 92 cents on the dollar, cheaper than 99% of companies in the Standard & Poor’s 500 Index excluding financials, according to data compiled by Bloomberg.
Sprints’ licenses from the U.S. Federal Communication’s Commission, which give it the right to operate its network in specific regions, alone are worth $19.9 billion, 46% more than its market capitalization of $13.6 billion.
AT&T’s purchase of T-Mobile USA from Deutsche Telekom AG will give the combined company more than double the customers of Sprint, while Verizon Wireless has almost twice the market share. As per analysts, to boost value, Sprint may buy the remaining stake in partner Clearwire Corp. or another carrier such as MetroPCS Communications Inc. It may also become a target for Verizon as carriers that run on the same network technology.
Sprint, Deutsche Telekom in talks over T-Mobile USA Merger
If sources are to be believed, Deutsche Telekom AG (DTE) has held talks to sell its T-Mobile USA unit to Sprint Nextel Corp.(S) in exchange for a major stake in the combined entity.
According to sources, talks have been on and off, and a deal may not be reached. The sources added that the companies haven’t been able to agree on the valuation of T-Mobile USA, which reported a drop in profit in the fourth quarter.
Deutsche Telekom says all options open in US (Germany)
Deutsche Telekom AG’s Chief Financial Officer has stated that all options will remain open for the company in the U.S., as shares rose on speculation of a tie-up with Sprint Nextel Corp in the U.S.
The manager was responding to reports that Deutsche Telekom has held talks to sell its T-Mobile USA unit to Sprint Nextel in exchange for a major stake in the combined entity, citing people with knowledge of the matter.
Telekom CFO Tim Hoettges listed various possibilities for the company’s U.S operations including a sale of the entire business. He added bringing in a partner, an initial public offering, or network co-operation also remain as options.
Deutsche Telekom to start US mobile towers sale in Q2 (Germany)
Deutsche Telekom AG’s Chief Financial Officer, Timotheus Hoettges has announced that the company has decided to sell its U.S. cellular towers, aiming at freeing up growth capital. The company will begin the sale in the second quarter.
Deutsche Telekom wants to sell and lease back its 7,000 cellular towers in the U.S. in a transaction that could generate a single digit billion dollar profit. The German telco’s competitors have already conducted similar deals.
According to Deutsche Telekom’s CFO, the transaction makes sense as it can generate money for profitable growth directly in the U.S. rather than injecting money from Germany in the market, which has showed continued weakness since 2008.
Deutsche Telekom is the smallest of the four major nationwide mobile network providers in the U.S. and has to buy new spectrum in the future ahead.
Hoettges excluded a sale of Deutsche Telekom’s U.S. operations.
Deutsche Telekom posts net loss in Q4 (Germany)
Europe’s largest telecommunications company, Deutsche Telekom AG has reported a net loss in fourth-quarter, depressed by eastern and southern European operations and asset writedowns.
The company recorded a net loss of US$803 million, compared with a loss of US$4.12 million a year earlier while analysts had predicted a net income of US$750.47 million. Adjusted earnings before interest, taxes, depreciation and amortization dropped 10% to US$6.25 billion, trailing the US$6.46 billion average estimate of 19 analysts.
Profit was weighed down by US$1.78 billion in one-time costs including US$611.65 million to write down the value of assets in Romania and in Greece, where Deutsche Telekom owns 30% of Hellenic Telecommunications Organization SA.
According to the company, it needs until as late as early 2012 to solve U.S. structural†problems, whereas it struggled to keep AT&T Inc. and Verizon Wireless from winning over customers.
As per the analysts, while it was clear that there would be impairments in Greece given the situation there, the high amount came as a surprise.
France Telecom, Deutsche Telekom plan to expand tech partnership
Deutsche Telekom AG and France Telecom SA are planning to explore potential areas of co-operation in several fields of technology.
The possible partnerships could include radio access network sharing in Europe, improving wireless internet while roaming, equipment standardization and cross-border services.
A France Telecom spokesman stated that this does not include any share swaps.
The two groups already own British mobile operator Everything Everywhere jointly, which has nearly 28 million customers.
Deutsche Telekom settles with former execs (Germany)
Deutsche Telekom AG has settled a dispute with former Chief Executive Kai-Uwe Ricke and former Chairman Klaus Zumwinkel on compensation claims related to a scandal in which phone log data of supervisory board members and journalists were monitored.
According to the company, both Ricke and Zumwinkel denied any wrongdoing but agreed to pay an undisclosed sum, partly covered by directors-and-officers insurance.
Last year, prosecutors dropped criminal investigation proceedings against Ricke and Zumwinkel.
Deutsche Telekom admitted in 2008 to having hired an outside company to track phone calls made by reporters and labor representatives on its supervisory board in order to try and find the source of leaks to the media.
As per the company, the settlement is subject to approval by Deutsche Telekom’s annual general meeting in May. Details on the settlement will be given at the AGM.
