AT&T Merger With T-Mobile Faces Setbacks

AT&T and T-Mobile USA edged closer to scrapping their proposed merger, saying on November 24 (yes, Thanksgiving day) that they had withdrawn their application to the Federal Communications Commission to join their cellular phone operations.

The FCC is not obligated to grant the request, however. It could deny the request, going ahead with its consideration and judicial hearing, or it could grant the request with prejudice, meaning that AT&T could not later refile the application. That would essentially kill the deal. Deutsche Telekom, the parent of T-Mobile, and AT&T said in a joint statement that they still intended to pursue the $39 billion merger and would prepare for a federal antitrust lawsuit that is seeking to block the deal. But the companies also said that AT&T planned to take a $4 billion charge against earnings to reflect the potential breakup fees that AT&T would have to pay Deutsche Telekom if the deal failed to go through. The application withdrawal appears in part meant to prevent the FCC from making public AT&T and T-Mobile records about the potential effects of the merger, records that could then be used by the Justice Department in its antitrust suit to block the deal. Deutsche Telekom, based in Germany, said in a statement that the withdrawal “is being undertaken by both companies to consolidate their strength and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice. As soon as practical, Deutsche Telekom and AT&T intend to seek necessary FCC approval.” AT&T issued its own statement saying that the companies were taking this step “to facilitate the consideration of all options at the FCC,” as well as to consider other options. (Nov 24)