Almost a year after U.S. regulators effectively scuttled AT&T’s $39 billion acquisition of T-Mobile USA from Deutsche Telekom, the German telecommunications giant has agreed to acquire MetroPCS Communications and merge it with T-Mobile in a deal that will create the nation’s fourth-largest wireless carrier.
At least nine law firms, several of them veterans of the AT&T/T-Mobile antitrust fight, are advising on the complex $1.5 billion cash, stock, and debt restructuring deal aimed at creating a combined company that would trail wireless market leaders AT&T and Verizon Wireless, but challenge the nation’s third-largest carrier, SprintNextel.
Sprint and its Skadden, Arps, Slate, Meagher & Flom–led legal team filed suit last year to block the sale of T-Mobile to AT&T. Suburban Dallas–based MetroPCS also expressed concerns that the merger might consolidate too much of the wireless spectrum in the hands of a single company and suggested that if regulators did approve the deal, they should only do so after requiring the merged entity to divest itself of certain regional wireless holdings.
MetroPCS, which was poised to pick up some of those assets in the event the AT&T/T-Mobile merger proceeded, was represented during that process by Carl Northrop, the former head of the telecommunications practice at Paul Hastings in Washington, D.C.
The Am Law Daily reported last year that Northrop left Paul Hastings as a result of conflicts between MetroPCS and Dallas-based AT&T, which has used Paul Hastings on other matters. Northrop’s new eight-lawyer boutique, Telecommunications Law Professionals (TLP), opened its doors in August 2011 with several former Paul Hastings lawyers on board and about a dozen former firm clients, according to our previous reports.
Both Paul Hastings and TLP are currently advising MetroPCS on its proposed sale to Deutsche Telekom and merger with T-Mobile. Paul Hastings litigation partner C. Scott Hataway, who joined the firm last year from now-defunct Howrey, is leading a team serving as antitrust counsel to MetroPCS on the transaction. Mark Stachiw, who was once of counsel at Paul Hastings, serves as vice-chairman and general counsel for MetroPCS.
Also representing MetroPCS are Gibson, Dunn & Crutcher M&A partners Jeffrey Chapman and Robert Little in Dallas—both of whom joined the firm last year from Vinson & Elkins—finance partners Joerg Esdorn and Darius Mehraban in New York, tax partner David Sinak, employee benefits partner David Schiller, antitrust partner Sean Royall, and technology partner Stephen Nordahl.
A special committee of MetroPCS’s board of directors is being advised by Akin Gump Strauss Hauer & Feld corporate cochair J. Kenneth Menges Jr. and finance partner Robert Dockery, as well as Fulbright & Jaworski litigation partners Brett Govett and Karl Dial.
For its part, Bonn-based Deutsche Telekom has turned to a team of lawyers from Wachtell, Lipton, Rosen & Katz; Cleary Gottlieb Steen & Hamilton; K&L Gates; and Wiley Rein for counsel on its bid to acquire MetroPCS. Wiley Rein and Cleary served as Federal Communications Commission and antitrust counsel, respectively, to Deutsche Telekom on the ill-fated sale of T-Mobile to AT&T last year, while Wachtell acted as lead deal counsel on the matter.
Deutsche Telekom and its Bellevue, Washington–based T-Mobile unit are being advised this time around by Wachtell corporate partner Adam Emmerich, restructuring and finance partner Eric Rosof, tax partners Jodi Schwartz and T. Eiko Stange, executive compensation partner Michael Segal, and antitrust partner Ilene Knable Gotts.
Cleary antitrust partners Mark Nelson and George Cary and tax partners Les Samuels and Yaron Reich are providing tax and antitrust counsel to Deutsche Telekom, which is also being advised by Wiley Rein founding partner and communications practice head Richard Wiley and partner Nancy Victory. (Wiley, honored as a Lifetime Achiever in The American Lawyer‘s September 2012 issue, is a former chair of the FCC.)
Rounding out the Deutsche Telekom and T-Mobile legal team are K&L Gates corporate partner Margaret Inouye, antitrust partner Ramona Emerson, and antitrust of counsel Richard Price. T-Mobile’s general counsel is David Miller, while Claudia Junker serves as general counsel for parent Deutsche Telekom, where she reports to board member for data privacy, legal affairs, and compliance Thomas Kremer. (Kremer took over in February from Manfred Balz, a former partner at Wilmer Cutler Pickering Hale and Dorr.)
The success of Deutsche Telekom’s proposed acquisition of MetroPCS will depend upon in large part on an analysis of the companies’ respective market shares at various local levels, says Sharis Pozen, a former acting assistant attorney general of the U.S. Department of Justices’s antitrust division, who joined Skadden in July after playing a key role in the regulatory review of AT&T’s ultimately unsuccessful effort to buy T-Mobile.
Pozen says the Justice Department can be expected to rely on a metric known as CMAs—or cellular marketing area—to determine how much of the local wireless market any combined entity will control.
FCC chairman Julius Genachowski—a Harvard Law School classmate of President Barack Obama—will handle his agency’s review of the proposed sale of MetroPCS. Leading the Justice Department’s antitrust review of the MetroPCS/T-Mobile merger will be former Simpson Thacher & Bartlett partner Joseph Wayland, who joined Main Justice in September 2010 and has served as acting assistant attorney general for antitrust since April.
Wayland will work closely with Scott Scheele, a litigator and chief of the telecommunications and media enforcement section within the Justice Department’s antitrust division, who recently took over leadership of the unit from Laury Bobbish after her early retirement.
Bobbish helped oversee the government’s investigation into the AT&T/T-Mobile merger, while Scheele took the lead on the Justice Department’s successful injunction against H&R Block’s $288 million acquisition of TaxAct software provider 2SS Holdings last November, according to The Am Law Litigation Daily.