ATT T-Mobile Merger
November 25, 2011 by staff
ATT T-mobile Merger, AT&T and T-Mobile USA appeared to edge closer to scrapping their proposed merger Thursday, saying they’d withdrawn their application to the Federal Communications Commission to join their cellphone operations.
Deutsche Telekom, the parent of T-Mobile, and AT&T said they still intended to pursue the $39 billion merger and would prepare for a federal antitrust lawsuit that’s seeking to block the deal.
But the companies also said AT&T planned to take a $4 billion charge against earnings to reflect the potential breakup fees AT&T would have to pay Deutsche Telekom if the deal failed to go through.
The actions followed the decision this week by FCC Chairman Julius Genachowski that the merger didn’t meet the commission’s standard for approval.
Genachowski sent other commissioners a proposed order to refer the case to an administrative law judge, the first step toward a commission move to block the deal, which would combine the second- and fourth-largest cellphone carriers in the U.S.
The application withdrawal appears in part designed to prevent the FCC from making public AT&T and T-Mobile records about the potential effects of the merger, records that then could be used by the Justice Department in the antitrust trial.
The companies have maintained publicly that the deal wouldn’t lessen competition and that it would create jobs in the U.S. But the Justice Department has said the merger would severely restrict competition, and FCC officials have said AT&T’s confidential filings indicate the merger would eliminate jobs.
The withdrawal of the FCC application “is a tacit acknowledgment by AT&T that this story is all but over,” said Craig Moffett, ananlyst at Sanford C. Bernstein. “The fat lady hasn’t started singing yet, but she’s holding the mic and the band is about to play.”
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