AT&T Bid for T-Mobile Faces California Review
AT&T Inc. (T), looking to win approval for its proposed $39 billion acquisition of T-Mobile, is facing a challenge in California where regulators have raised questions about the deal's effect on consumers and corporate customers.
Context & Ripple Effects
AT&T's $39 billion bid for T-Mobile has been pending before regulators since at least late July 2011, and the carrier is already fighting the deal on the political flank — T-Mobile publicly pushed back in July against Sen. Franken's recommendation to reject the merger. With this report, California becomes an additional arena: state regulators there have raised questions about what the combination would mean for consumers and corporate customers, putting AT&T's case under review at the state level alongside its federal approvals.
First-order effects
- AT&T must now satisfy California regulators on consumer and business-customer impacts before it can clear the state leg of approval for the T-Mobile purchase.
- Corporate customers in California face prolonged uncertainty over wireless contracts and pricing while the state review runs its course.
Second-order effects
- Consumer advocates gain fresh ammunition: the reported (and unconfirmed) practice of moving AT&T's grandfathered unlimited-plan iPhone users who jailbreak onto tiered plans feeds directly into the state's questions about treatment of existing subscribers.
- If California extracts commitments as the price of approval, AT&T's remedy package for the deal grows beyond whatever terms it has offered federally, raising the total cost of closing.
Third-order effects
- A pattern in which large telecom mergers require clearing both federal review and a gauntlet of state-level consumer-impact inquiries would raise the bar for any future consolidation among national US carriers.
The trend: US wireless consolidation is increasingly gated by state regulatory reviews layered on top of federal antitrust scrutiny, forcing acquirers to negotiate market-by-market remedies.