AT&T’s 11th-Hour Plan to Save Its Deal With T-Mobile

AT&T has been secretly working on an audacious 11th-hour deal to salvage its $39 billion acquisition of T-Mobile: AT&T is knee-deep in talks with Leap Wireless, a second-tier but growing wireless player, to sell it a big piece of T-Mobile’s customer accounts and some of its wireless spectrum.

AT&T hopes such a deal would placate the Justice Department enough for it to drop its opposition to AT&T’s acquisition of T-Mobile or at least to strengthen AT&T’s hand if it goes to trial. The deal would make Leap the fourth-largest wireless carrier in the nation, but it would allow AT&T to retain enough of T-Mobile’s valuable wireless spectrum, which it says it badly needs to provide the kind of next-generation service that its customers expect. If the Leap deal sounds a bit like a Hail Mary pass, that is because it is. It is just as questionable as AT&T’s original deal to merge with T-Mobile. Even with creating a new No. 4 player, it does little to change the duopoly that would be created as a result of the deal, making AT&T and Verizon clear favorites, while leaving Sprint, Leap and MetroPCS far behind; in particular, Leap and MetroPCS would probably still be without enough spectrum or cash flow to be truly competitive.