By Dan Primack
September 1, 2011

Bank analysts covering AT&T (T) are beginning to chime in on the Department of Justice’s attempt to kill the telecom giant’s proposed $38 billion acquisition of T-Mobile. Here is a sampling:

James Radcliffe of Barclays Capital
“We believe that the deal is by no means dead, as the DOJ has stated that the “door is open” for AT&T to propose remedies, but the fact that the DOJ took this strong step this early in the process makes the probability of completion much lower. We now view the probability of success at 35-40%, down from our previous 75% view. We view the news as negative for T, positive for towers, slightly negative for VZ, and positive (although not universally so) for S.”

David Barden of BoA Merrill Lynch
“Based on AT&T’s reaction statement and prior comments, it will fight the move on the grounds a national competitive framework deviates from precedent. The upside to fighting for T is it will delay payment of the $3bn breakup fee, paralyze T-Mobile for some period and potentially muddy Sprint’s strategic choice-making.”

Mike McCormack of Nomura
“We believe that the current state of the wireless industry is too competitive, with six or more parties seeking share via price and subscriber subsidies. Without the combination of AT&T and T-Mobile, we think the outlook for equity investor returns is curtailed by ARPU deceleration and subsidy acceleration headwinds.”

Jennifer Fritzsche of Wells Fargo
“If it is not approved, we would remind investors that while T likely would need more spectrum longer term (like VZ), it does have over 20 MHz of 700 MHz spectrum in the top 100 U.S. markets. We anticipate that T would pull back on its commitment to over 95%+ of the U.S. with LTE. But in no means do we believe T is a broken wireless story without T Mobile in hand.”

Christopher King of Stifel Nicolaus
“We believe that a blocked deal would ultimately be good news for Sprint insofar as it would maintain the status quo in the U.S. wireless market and open the doors for a potential Sprint, T-Mobile deal. However, we also note that today’s DOJ announcement focused frequently on the benefit of having four national wireless carriers—suggesting that a Sprint-TMO deal may not be an easy sell with regulators, either.”

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