Despite the Department of Justice's antitrust lawsuit aimed at stopping AT&T's
The company's chief financial officer, John Stephens, told attendees of the UBS Conference on Global Media yesterday that AT&T would "continue to move forward ... to complete the T-Mobile transaction."
Stephens also wanted to make it quite clear that AT&T had the resources to readily pay for T-Mobile's purchase from its owner Deutsche Telekom. He emphasized that the company had $10 billion in cash on hand, which "is clearly there to prepare us for the T-Mobile closing and to allow us to do that very easily." He also pointed out that the company has access to a "$20 billion bridge facility" and an "$8 billion backup facility that's in place today."
Did I mention our dividend?
Though Stephens wasn't asked about AT&T's dividend, he made sure to bring it up ... twice. The first time was at the end of his prepared statement: "Our dividend record is the envy of the industry. We're the only major telecom company to raise our dividend for 27 consecutive years, and our dividend yield is currently around six percent."
But later, in the second part of his answer to this question: "Could you just talk about the potential uses of that cash [the $10 billion AT&T has on its balance sheet] -- what if the worst case scenario were [to] play out and you were not able to move forward with T-Mobile?"
Stephens gave this somewhat enigmatic response:
Our board decides our dividends and our dividends policy. They're the ones that approve any changes in our dividend payouts, schedules, and amounts ... and we have positioned ourselves very well to be able to act upon that board of directors' decision. Ten billion dollars is a lot of money.
Does that answer indicate that some of that $10 billion would become a windfall dividend for investors, a kind of consolation prize if the deal fizzles away? Is it a signal to soften the blow to shareholders if the T-Mobile merger fails -- which seems more and more likely?
And speaking of that large fourth-quarter charge...
In what could be another attempt to prep the market for the deal's demise, Stephens brought up the bright side of the real possibility of AT&T having to pay Deutsche Telekom a failure-to-complete fee.
"The $4 billion charge is a pre-tax charge ... I certainly expect that it'll be fully deductible ... you guys can do the math on that."
According to The Wall Street Journal, UBS analysts pulled out their calculators and came up with AT&T's fee actually coming to between $1.5 billion and $1.8 billion. Shareholders, feel better?
In answer to a question about why AT&T took that $4 billion charge, Stephens said, "We are going to continue to work with our partner DT, Deutsche Telecom, and work toward a resolution of the transaction. Those conversations, as they occur, if and when they occur ... will be kept confidential ... in hopes to improve the opportunity for the process to be successful."
The italics are mine in the above quote. That "if" only adds to the feeling that AT&T is preparing for a worst-case scenario.
Not giving up yet, it seems
I couldn't blame the company for throwing in the towel. It still has to fight through Sprint Nextel's
Still, when pressed by the very last questioner at the UBS conference about any fallback plans, Stephens stayed resolute:
Questioner: "Could you give us a better sense of Plan B?"
Stephens: "Our Plan A."
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Fool contributor Dan Radovsky owns shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.