A Prototypical M&A Interview

By Eric Seidel, CEO

The Media Trainers®


Thirty-nine billion dollars.

That’s what AT&T Mobility is anteing up for T-Mobile. If approved, they’ll form the largest cell system in the U.S. If the Justice Department says “no” to the deal, AT&T has to pay T-Mobile a $3 billion break-up fee.

Those are big numbers…especially the break-up fee. That puts down a pretty heavy bet the sale will be approved.

Lots of questions about this huge merger, posed by the hyper-kinetic, hyperbolized, often over the top Jim Cramer of Mad Money fame on CNBC. On his firing line: AT&T Mobility & Consumer Markets CEO Ralph De La Vega. De La Vega did a good job, overall, although he did answer the first question saying “this is a marriage made in heaven.” That little trite expression took some of the bloom off the rose, to use another trite phrase.

But, he was much more on point after that, speaking directly to government regulators, shareholders and customers about the advantages of the deal and the two companies.

This interview is a good example for you, especially if you’re a public company talking to the media about a merger or acquisition, or any other issues where some of your responses require restraint. Some examples

Q: Cramer: “Why three billion (break-up fee)? How did you arrive at that? That’s such a gigantic amount, especially if the Justice Department says forget it, you’re out (of the three billion).”

A: De La Vega: “We feel very confident. We’re not going to comment on the exact process of the department, we’re very respectful of what they use. They Department of Justice has always looked at competition on the local level…and when you look at it on the local market level 18 of the top 20 markets have five or more competitors…so the combination of this will still keep the U.S. as the most competitive marketplace in the world.”

Q: Cramer: “You say no divestitures are needed…what are you willing to give away? Would you be willing to fund…competitors to get this deal done?

A: De La Vega: “I don’t know that it’s appropriate to talk ahead of time about what we’d be willing to do…but…if you look at the amount of spectrum that AT&T and T-Mobile have combined, Sprint has more… They have three times more spectrum than we have per subscriber… So, there’s still going to be great competition…”

Q: Cramer: “I see a story that ‘AT&T deal raises fears of higher charges.’ (As a shareholder) don’t I absolutely want higher charges?”

A: De La Vega: “Well, if you look at the history of the merger and the pricing activity in this country, Jim, what you’re going to find is prices have actually fallen 50% over the last ten years even though you had the Sprint-Nextel merger, also the Verizon merger, prices have come down…”

Q: Cramer: “Shareholders might say…I hope they’re able to not spend that much money on capital expenditures now; they cut back the number of towers they use, they don’t need all these towers; and they can start returning more money to shareholders. But, in terms of growth, you want the opposite of that. How do you reconcile these two?”

A: De La Vega: “Well, I think the way we do it is the way we are planning our businesses. I think we’re going to continue to invest, Jim. In fact, we have said that we’re going to invest an additional eight billion in infrastructure to facilitate us making this merger work and extending the LTE to 95% of the population. We have a metric that we say about every billion dollars results in 7,000 new jobs…I think it’s good for the overall economy.”

De La Vega wrapped up the interview speaking to AT&T’s expectations for continued explosive growth of the cellular industry. Throughout he remained on message, aimed squarely at the Obama Administration, Justice, shareholders and, yes, customers.

Overall, a very good job dealing with sensitive issues, especially speaking to the Justice Department’s role in approving the AT&T-T-Mobile merger and recognizing the Administration’s desire for wider availability of wireless.


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