Analysis: AT&T may struggle to find asset buyers

Wed Nov 30, 2011 7:45am EST
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By Sinead Carew

(Reuters) - AT&T Inc will struggle to find buyers for any asset sale big enough to salvage its $39 billion deal to buy T-Mobile USA, with most likely buyers Leap Wireless International Inc and MetroPCS Communications lacking the cash.

AT&T is looking for ways to make the acquisition more palatable to the U.S. Justice Department and the Federal Communications Commission which have raised objections over reduced competition and job losses.

Leap Wireless is currently in talks with AT&T about asset purchases, according to the New York Times.

And MetroPCS has long said it would consider purchasing any spectrum that is up for sale as a condition for the AT&T deal approval.

But with some analysts estimating that AT&T would have to hive off a huge amount of Deutsch Telekom AG's T-Mobile assets to get the deal through, they worry that neither MetroPCS nor Leap can hope to stump up the cash to pay for the assets.

"The problem is that Leap Wireless or MetroPCS don't have enough liquidity to buy enough assets to make it palatable to the DOJ," said Macquarie Research analyst Kevin Smithen who estimated that AT&T would have to sell up to $10 billion in assets in order to make regulators happy.

Leap Wireless posted a third quarter loss of $94.1 million and had $3.2 billion in long-term debt and $424.7 million of cash and equivalents at the end of September. MetroPCS has earmarked about $2 billion for use in a spectrum purchase.

Representatives for AT&T and Leap declined comment for the story and MetroPCS was not immediately available for comment.   Continued...