AT&T Filings May Cast Doubt On Its Main Pro-Merger Argument

AT&T may be its own worst enemy.  

Opponents of the telecom giant's plan to take over T-Mobile are pointing to documents AT&T filed with the Federal Communications Commission last week that cast doubt on AT&T's claim that it can't build out its 4G LTE service nationwide unless it acquires T-Mobile.

Communications Daily, which was first to publish the documents, reports that in the filing, AT&T admitted that expanding its most advanced network to 97 percent of the country would cost only an estimated $3.8 billion. But the filing shows AT&T rejected that option, claiming there wasn’t a “viable business case” to justify the expansion.

Yet the company is willing to spend $39 billion on the T-Mobile takeover — 10 times as much. And the company is committed to paying T-Mobile $6 billion in total compensation if the deal falls through, $2.2 billion more than it would cost to expand its service.

Meanwhile, the consumer group Free Press obtained an AT&T fact sheet being used to lure support for the merger. The fact sheet features the claim that the proposed combination of AT&T and T-Mobile is the "rare case where 1 + 1 = 3."

"Only at AT&T does one plus one equal three. You can call it fuzzy math or you can call it lying, but AT&T's case for this takeover doesn't withstand scrutiny," said Free Press President and CEO Craig Aaron.

"As the real numbers and facts come to the public's attention, support for this merger continues to unravel. The Department of Justice and the FCC have all the evidence they need to block this dangerous deal," Aaron said.

Competition killer

"We now know the truth: AT&T is willing to pay a $39 billion premium for one reason and one reason only — to kill off the competition," he said. "It would cost AT&T one-tenth of the merger’s cost to expand its network than to buy up T-Mobile. Yet AT&T is willing to pay a 900-percent markup to take out a lower-priced competitor and make sure it can lock in and gouge consumers in the future."

The only thing stopping AT&T from expanding its network is greed, Aaron said.

"AT&T has already told Wall Street it plans to cut investment by $10 billion if the deal goes through. And there has never been a merger that didn't lead to job cuts—or synergies, as AT&T calls them," he added. "At a moment when Washington claims to be all about job creation, policymakers are staring at a deal that will likely push another 20,000 workers into the unemployment line."

The growing anti-AT&T blowback may be having an effect. A Stifel Nicolaus poll of telecom analysts released late last week gave the deal only a 49.5 percent chance of being approved.