Some might argue, irrespective of the merits of the proposed AT&T (News - Alert) deal to buy T-Mobile USA, that the “deliverable” benefits seem not to match the stated rationale so neatly. The issue, in that sense, is not the wisdom of the deal in an absolute sense, but the sense of mismatch of deal benefits to offered language.

If the U.S. Department of Justice challenge to AT&T's T-Mobile (News - Alert) USA bid fails, AT&T will focus on other ways to add more radio capacity to its 3G network, argues Dan Jones at Light Reading. Jones points out that AT&T itself has said that the deal would allow the company to "immediately gain cell sites equivalent to what would have taken on average five years to build without the transaction and double that in some markets."

"The combination will increase AT&T’s network density by approximately 30 percent in some of its most populated areas while avoiding the need to construct additional cell towers," AT&T said when it first announced the bid.

Finding quick ways to add more radio density to its 3G network, rather than a nationwide 4G Long Term Evolution (LTE) deployment, might be top priority, should the deal fail. Light Reading What AT&T Loses without T-Mobile

That point of view is among the somewhat incongruous angles some have noted about the bid. Though positioned as a way to get more mobile broadband spectrum into place, some have noted that no new spectrum gets added: what exists simply is redistributed. Does the deal add spectrum?  What new spectrum is added?

Pitched as a material contribution to 4G capabilities, the practical impact seems to be on the 3G front. Some say the only clear implication is that the deal removes a big competitor from the market.

Beyond that, there are any number of potential implications as AT&T attempts to answer Department of Justice objections. The most basic question is how to divest assets when the primary objection is simply that AT&T already is too big.

"AT&T would have to spin off most of T-Mobile USA to solve this problem, which makes the merger not worth it," said Roger Noll, a professor of economics at Stanford University. "I do not expect a settlement." At the national level, the merger removes one of only four competitors, and a low-priced one at that. Deal issues

For T-Mobile USA, any failure would have some very practical implications as well. T-Mobile USA still has to figure out what to do with a business that has struggled for a decade, and might have fewer options if it continues to want to exit the U.S. market.

“They’ve got a problem on their hands with T-Mobile,” said Brian Barish, Denver-based president of Cambiar Investors LLC. Deutsche Telekom isn’t “going to get as much money as they were hoping. It’s basically damaged goods, T-Mobile. They are going to have to figure out a plan B strategy that is mindful of that unavoidable reality,” he said. Deal failure would devalue T-Mobile

The other issue is that the market value T-Mobile USA represents will be lower. AT&T agreed in March to pay $39 billion for Deutsche Telekom’s U.S. mobile-phone unit. That valuation represents 28.8 times profit, said to be the highest valuation of any wireless carrier outside China.

In a hypothetical sale to another buyer, the asset now would be worth about $12 billion less for Deutsche Telekom, according to data compiled by Bloomberg (News - Alert).

Both AT&T and T-Mobile USA say they will fight to save the deal. Some might argue the Department of Justice objections are simply an attempt to gain negotiating leverage. Others say there is genuine concern that the deal would pose unacceptable market concentration risks. AT&T, T-Mobile USA fighting to save deal

Among the implications of the unexpected opposition to the merger is the uncertainty that now exists about whether any other similar sale of T-Mobile USA, including to “white knight” Sprint Nextel, now is possible.

Any deal failure would be potentially expensive for AT&T, given the possible payment of a big breakup fee. For T-Mobile USA, the issue would seem to be the unresolved strategic issues. A viable 4G growth strategy has been difficult. Now even a market exit seems to be more difficult.

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