BroadbandReports.com today links to an item written on Friday by industry analyst David Burstein on DSLPrime.com which specifically suggests that AT&T might be willing to throw in the towel. Burstein writes that “[AT&T CEO] Ed Whitacre is willing to let the BellSouth deal die, a sensible move given the price has gone up $17 [billion] since March when the deal was announced and $29 [billion] since January.”
Burstein says his belief that Whitacre would be willing to let the deal die stems from logic, rather than any internal source: He writes that it was “obvious” that some of the company’s “favorite” Congressmen would lose; that Whitacre could have cut a deal in September “for a fraction” of the $6 billion his company’s market cap has lost since the election; that “only someone stupid wouldn’t have moved hard defore the election, and similarly now”; and that “Ed Whitacre isn’t stupid.” Ergo, he concludes: “Whitacre is willing to risk the deal.” And if it dies as a result of the FCC blocking the deal, the company may also save a reported $1.7 billion breakup fee, he writes.
While Burstein says he does not think the FCC ultimately will block the deal, that remains a possible outcome. And given some concerns on the Street with the price AT&T is paying for BellSouth, the stock’s performance today could be responding to the theory that the deal could be in trouble.
T-BLS 1-yr comparison chart: