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N2K: Huntsman’s Strength in Weakness

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April 17, 2011, 5:50 p.m.

Con­duc­ted 10/5-7; sur­veyed 1,008 adults; mar­gin of er­ror +/- 3.1%. Sub­sample of 504 LVs; mar­gin of er­ror +/- 4.4% (re­leases, 10/11-12).

Cong. Dem Lead­ers Job Ap­prov­al

- All LVs 3/28 3/21 10/18 4/26 2/09 11/08 10/08 Ap­prove 34% 32% 42% 33% 38% 43% 60% 47% 34% Dis­ap­prove 64 66 57 65 59 53 39 50 64

Cong. GOP Lead­ers Job Ap­prov­al

- All LVs 3/28 3/21 10/09 4/09 2/09 11/08 10/08 Ap­prove 31% 29% 36% 32% 33% 31% 44% 24% 27% Dis­ap­prove 66 67 63 66 66 65 55 73 71

If Dems Re­tain Con­trol Of Con­gress In This Nov.’s Elec­tion, Do You Think That Their Policies Would Move The Coun­try In The Right Dir./Wrong Dir. In ___ Area?

- ————All———— ————LVs———— - Right­Dir. Wrong­Dir. Right­Dir. Wrong­Dir. Ter­ror­ism 46% 50% 43% 52% Health care 43 56 43 56 Afgh­anistan 42 53 40 55 Eco­nomy 41 56 41 57 Eth­ics in gov’t 40 55 38 58 Taxes 40 58 38 60 Il­leg­al im­mig­ra­tion 36 58 33 61 The amount of money gov’t spends 29 69 31 68

If GOP­ers Win Con­trol Of Con­gress In This Nov.’s Elec­tion, Do You Think That Their Policies Would Move The Coun­try In The Right Dir./Wrong Dir. In ___ Area?

- ————All———— ————LVs———— - Right­Dir. Wrong­Dir. Right­Dir. Wrong­Dir. Ter­ror­ism 58% 36% 62% 33% Il­leg­al im­mig­ra­tion 50 44 53 42 Health care 48 50 52 45 Eco­nomy 47 49 52 45 Afgh­anistan 45 48 47 44 Taxes 45 51 52 45 Eth­ics in gov’t 43 50 49 44 The amount of money gov’t spends 43 54 49 46

Obama Has The Per­son­al­ity And Lead­er­ship Qual­it­ies A POTUS Should Have

- Now 5/23 1/10 10/09 4/09 11/08 9/08 6/08 1/08 Agree 59% 65% 64% 66% 75% 66% 64% 63% 59% Dis­agree 40 35 35 33 24 34 36 36 38

Do You Agree/Dis­agree With Obama On The Is­sues That Mat­ter Most To You?

- Now 5/23 1/10 10/09 4/09 11/08 9/08 Agree 42% 48% 49% 48% 57% 60% 56% Dis­agree 55 50 50 51 41 40 43

The ar­gu­ment over the pro­posed mer­ger of AT&T and T-Mo­bile USA has been a tale of two T-Mos.

T-Mo­bile, the na­tion’s fourth-largest wire­less car­ri­er, is either a com­pet­it­ive force that AT&T is try­ing to elim­in­ate from the mar­ket, or a strug­gling firm on the brink of col­lapse.

Now that the Justice De­part­ment and the Fed­er­al Com­mu­nic­a­tions Com­mis­sion have come out against the mer­ger, the big ques­tion is what will hap­pen to T-Mo­bile if the deal fails. The com­pany’s 30 mil­lion cus­tom­ers and 40,000 em­ploy­ees would surely love to know.

There are only a few paths for­ward for the com­pany: It can con­tin­ue op­er­at­ing as an in­di­vidu­al firm, it can court a new buy­er, or its own­er, Deutsche Telekom, can be­gin shut­ter­ing op­er­a­tions and selling off pieces.

Which is most likely? Im­possible to say.

Des­pite pages and pages of ana­lys­is on the ques­tion, a reg­u­lat­ory fight is stand­ing in the way of any good guesses about T-Mo­bile’s fu­ture. Both sides have a lot rid­ing on their nar­rat­ive about how be­lea­guered T-Mo­bile is today, and the read on T-Mo­bile’s op­tions is fun­da­ment­al to mer­ger ar­gu­ments on both sides. Any real clar­ity on T-Mo­bile’s pro­spects de­pends on its own­er speak­ing up about how much it wants to be in the U.S. wire­less busi­ness, but that kind of straight talk shouldn’t be ex­pec­ted un­til the mer­ger fight is truly over.

T-Mo’s op­tions have be­come a di­vid­ing line in the mer­ger de­bate. Deal op­pon­ents make T-Mo­bile sound like a pretty im­press­ive com­pany.

Here’s how the Justice De­part­ment de­scribed the car­ri­er in its com­plaint against the mer­ger, filed in Au­gust: T-Mo­bile “places im­port­ant com­pet­it­ive pres­sure on its three lar­ger rivals, par­tic­u­larly in terms of pri­cing, a crit­ic­ally im­port­ant as­pect of com­pet­i­tion.”

T-Mo­bile is “a sig­ni­fic­ant com­pet­it­ive force from the mar­ket,” DOJ ad­ded, and its “in­vest­ment in an ad­vanced high-speed net­work and its in­nov­a­tions in tech­no­logy and mo­bile wire­less tele­com­mu­nic­a­tions ser­vices have provided, and con­tin­ue to provide, con­sumers with sig­ni­fic­ant value.”

But AT&T and Deutsche Telekom, as a cent­ral part of their mer­ger ar­gu­ment, say it will be very dif­fi­cult for T-Mo­bile to com­pete in the near-term.

At a House hear­ing in May, Deutsche Telekom CEO Rene Ober­mann said T-Mo­bile can­not up­grade its net­work to the latest and speedi­est “long-term evol­u­tion,” or LTE, wire­less tech­no­logy.

“While oth­er com­pet­it­ors are mov­ing quickly to build out and de­vel­op their LTE net­works, T-Mo­bile lacks a clear path to LTE de­ploy­ment. To meet the ex­po­nen­tial growth in de­mand for band­width, T-Mo­bile will need to move to LTE to re­main com­pet­it­ive,” Ober­mann said.

T-Mo­bile needs more air­waves if it is to up­grade to this tech­no­logy ef­fect­ively, ac­cord­ing to Ober­mann.

T-Mo­bile CEO Phil­ipp Humm un­der­scored the com­pany’s dif­fi­culties in testi­mony to the Sen­ate Ju­di­ciary Com­mit­tee, say­ing Deutsche Telekom does not have a way to keep in­vest­ing in it.

“In ad­di­tion to these un­solved stra­tegic is­sues, T-Mo­bile’s par­ent, Deutsche Telekom, is not in a po­s­i­tion to fin­ance the ne­ces­sary large-scale in­vest­ments in the U.S. for T-Mo­bile to re­main com­pet­it­ive. The com­bin­a­tion with AT&T al­lows T-Mo­bile to ad­dress these chal­lenges as well as to real­ize near-term be­ne­fits for its cus­tom­ers,” he said.

The com­pany line is that DT is done in­vest­ing in T-Mo. As long as the com­pany is con­trac­tu­ally ob­lig­ated to pro­mote the mer­ger, that is ex­pec­ted to re­main the line.

So what’s next for T-Mo­bile? A mer­ger with Sprint? A buy­ing spree of smal­ler com­pan­ies? An at­tempt to lever­age the po­ten­tial break­up fee from AT&T — bil­lions of dol­lars plus spec­trum — to get a leg up in the mar­ket? An “out-of-busi­ness” sign on the door? Ana­lysts have writ­ten reams on the ques­tion in re­cent days.

But it’s im­possible to say un­til Deutsche Telekom can be forth­com­ing about wheth­er it has a de­sire to in­vest in the U.S. in the af­ter­math of a failed mer­ger. Some factors have changed since the mer­ger was filed, in­clud­ing new chal­lenges for the European eco­nomy and a great­er pro­spect that more spec­trum will go on the mar­ket in the U.S.

But Deutsche Telekom surely won’t speak up un­til — if — the mer­ger is truly dead.

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