AT&T Inc. (T) is approaching smaller rivals including MetroPCS Communications Inc. (PCS) and Leap Wireless International Inc. (LEAP) to sell spectrum and subscribers as part of an attempt to save its $39 billion takeover of T-Mobile USA Inc., said two people with direct knowledge of the situation.
The phone company, based in Dallas, has also reached out to CenturyLink Inc. (CTL), Dish Network Corp. (DISH) and Sprint Nextel Corp. (S) to gauge their interest in buying assets, said the people, who declined to be identified because the talks are private.
AT&T is seeking ways to salvage its agreement to buy T- Mobile USA from Bonn-based Deutsche Telekom AG (DTE) after the Justice Department sued on Aug. 31 to stop the deal. The talks with competitors are preliminary and may not lead to a deal, and the Justice Department may also deem the remedies insufficient, the people said.
AT&T, which would become the largest U.S. wireless operator with the purchase, has said it will fight the Justice Department in court and has asked for an expedited hearing for the case. The company and the agency are scheduled to meet in court Sept. 21 to explore whether a settlement may be reached.
“There’s a good possibility that the deal closes successfully,” said Chris Larsen, an analyst at Piper Jaffray & Co. in New York who has an “overweight” rating on AT&T stock with a $35 price estimate. Larsen said U.S. Cellular Corp. (USM) and private-equity firms also are potential buyers of AT&T’s assets.
Bank of America Corp. is advising AT&T on potential asset sales, according to the people. JPMorgan Chase & Co., Greenhill & Co. and Evercore Partners Inc. were AT&T’s original advisers on the deal.
Sprint, the third-biggest U.S. mobile operator, filed a Sept. 6 antitrust lawsuit against the T-Mobile deal.
Spokesmen for AT&T, Deutsche Telekom, MetroPCS, Leap, CenturyLink, Dish, Sprint and Bank of America declined to comment.
AT&T fell 36 cents, or 1.2 percent, to $28.58 at 4 p.m. in New York Stock Exchange trading, while Sprint declined 1 cent to $3.35. Deutsche Telekom fell 2.1 percent to 8.33 euros in Frankfurt trading today.
AT&T has agreed to compensate Deutsche Telekom with $3 billion in cash, as well as wireless spectrum and roaming agreements, if the deal isn’t completed. Deutsche Telekom has also said it will work to close the deal. In addition to the DOJ, the companies need approval from the Federal Communications Commission to complete the transaction.