AT&T, the No. 2 U.S. wireless carrier, may be trying to salvage its $39 billion deal to acquire T-Mobile by agreeing to sell assets to loss-ridden Leap Wireless International.
Despite taking a $4 billion charge to essentially write off the deal last week, AT&T executives believe that by agreeing to hive off assets to Leap Wireless, the deal could go through, the New York Times reported.
The U.S. Justice Department sued Dallas-based AT&T in August under the Clayton Act charging that combining it with Deutsche Telekom's T-Mobile, currently No. 4 in wireless, would result in a giant carrier that would stifle competition.
U.S. District Court Judge Ellen S. Huvelle has scheduled trial for Feb. 13.
Leap Wireless, based in San Diego, had only 5.75 million customers in the third quarter, compared with more than 140 million from a combined AT&T with T-Mobile.
Leap reported its third-quarter net loss narrowed to $94.1 million from $533.3 million a year ago while revenue rose 20 percent to $717.3 million.
Neither Leap Wireless not AT&T commented on any negotiations to the Times, where correspondent Andrew Ross Sorkin recounted a call to his residence from AT&T CEO Randall Stephenson on the day of the takeover deal.
Last week, AT&T and T-Mobile withdrew their application for a review of the deal by the U.S. Federal Communications Commission but issued statements they still planned to complete it.
Under terms of the takeover contract, AT&T would have to pay T-Mobile a $3 billion breakup fee as well as provide services valued around $1 billion.
AT&T is being advised by Greenhill & Co., Evercore Partners and JPMorgan Chase, while T-Mobile is being advised by Deutsche Bank, Credit Suisse, Morgan Stanley and Citigroup.
AT&T shares traded around $28.15, up 20 cents, in early Tuesday trading while Leap Wireless shares rose 13 cents to $7.80, giving it a market capitalization of $614.5 million compared with AT&T's $166.8 billion.