AT&T Chief Financial Officer John Stephens is putting a brave face on his company's beleaguered bid to acquire T-Mobile. Speaking at the UBS Conference on Global Media in New York City on Wednesday morning, Stephens promised that the telco would "continue to move forward" with its efforts "to complete the T-Mobile transaction."

AT&T and T-Mobile owner Deutsche Telecom are "motivated to complete a transaction and we continue to pursue the sale," he confidently told the conference panel.

"Not much more that I can tell you this morning, but it's important to remember why we did this deal in the first place," Stephens added. "It's for our customers. It's a solid, strategic move that will help us provide better service, while addressing the spectrum concerns that everyone in the industry shares."

But listening to the whole conference Q&A with Stephens, a bystander might get the impression that AT&T has at least half an eye on the exit doors, given this obliquely worded proclamation:

As I said before, we are going to continue to work with our partner DT, Deutsche Telekom, and work toward a resolution of the transaction. Those conversations, as they occur, if and when they occur, and as they occur with the Department of Justice, will be kept confidential out of respect for them and for our partners and in hopes to improve the opportunity for the process to be successful.

One doesn't want to go overboard, tea leaf reading-wise, but "if and when they occur"? Here's a quick recap of recent merger drama events.

Unprecedented in scale

Two weeks ago AT&T withdrew its merger application from the Federal Communications Commission, following the agency's decision to transfer the bid to an administrative law judge. The FCC move was widely interpreted as a sign of the Commission's disapproval of the $39 billion buyout. The AT&T retreat was widely seen as an effort to avoid the publication of an internal staff report on the proposed acquisition.

Alas (for AT&T) the FCC released the document anyway, which did not mince words. "By combining these two nationwide providers, the proposed transaction would result in an increase in both subscriber and spectrum concentration that is unprecedented in scale," the document warned. Not only would the merger "lead to a substantial lessening of competition," but it would also generate a "net loss of direct jobs."

The wireless giant didn't shave the rhetoric in its response to the FCC move, either. The report "lacks all credibility," said senior executive vice president Jim Cicconi, and is "so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis."

But whatever you think about this matter, if AT&T wants to continue its bid for T-Mobile, it is going to have to joust with the Department of Justice, which is suing to stop the transaction. Another revealing artifact from that theater of combat surfaced on Tuesday, when a judge considered a request by LightSquared to "quash" a subpoena for deposition from AT&T.

Yes, Master

The "Master Order" doesn't say why AT&T wants LightSquared to be deposed, but it does reveal what LightSquared lawyers argued regarding the request.

"Because AT&T does not currently have an application pending before the FCC, and because FCC approval is a prerequisite to completing the proposed merger," the summary explains, "LightSquared argues that it is unduly burdensome to force it to undertake the inconvenience and expense of a deposition while the future of the deal is uncertain."

The proceeding's "Special Master" in question—Richard A. Levie—sympathized with this line of argument, but only up to a point. His opinion admitted to being "sensitive" to LightSquared's concerns. "The recent activity before the FCC raises the specter of an alteration of the course of the proposed merger."

Levie also mentioned a DoJ observation that, based on recent AT&T comments, the current litigation may, "in fact, not present a live case or controversy."

But live or not, a case is a case, Levie added:

LightSquared's reluctance to expend resources on depositions in a case to which it is not a party and which it believes may not reach trial is understandable. Nevertheless, the potential for an out-of-court resolution is too uncertain to rise to the level of undue burden... Unless or until the status of this case changes, the parties and non-parties subject to otherwise valid subpoenas have an obligation to proceed.

Money not a problem



It is in this context that Stephens made his remarks at the UBS conference. He made much of the fact that AT&T has $10 billion on its balance sheet ready for completing the T-Mobile transaction. That and more, in fact.

"The accumulation of cash is clearly there to prepare us for the T-Mobile closing and to allow us to do that very easily," Stephens said. "If you are also familiar with our capacity we have a $20 billion bridge facility... and we an $8 billion backup facility that's in place today that backs up commercial paper and we haven't drawn on any commercial paper. So we clearly have an ability to close the deal very quickly and have those resources. That's the plan."

But then came this codicil, a reference to AT&T's proud 27-year history of dividend performance. "We're still very committed to getting the transaction done," said Stephens. "On another side of that question though":

I think the people in this room know that the Board decides our dividend, and our dividend policy. They are the ones who approve any changes in our dividend schedules and amounts, but we have a 27-year record. We think and understand that it is an important part of what our shareholders receive, and we have positioned ourselves very well to act upon that Board of Director decision.

After all, $10 billion "is a lot of money," AT&T's CFO noted. He'll get no argument from us on that, nor from the Special Master that this is obviously a very fluid situation.

"The federal court case remains on track with a scheduled trial date of February 13, 2012," judge Levie's document concludes. But another status hearing is scheduled for Friday at 9:30am.