Is AT&T admitting defeat in its $39 billion bid to acquire T-Mobile, or just taking a breather while it figures out another way to structure the merger?
In a terse statement Monday, AT&T and Deutsche Telekom said the companies advised Judge Ellen Huvelle of the U.S. District Court for the District of Columbia that they "wish to stay further Court proceedings until Jan. 18, 2012, to allow the two companies to evaluate all options."
The Department of Justice, which is fighting to block the merger, joined in the filing. The regulator was set to file Tuesday to either stay the case or dismiss it.
Judge Huvelle ordered that the next status conference would be held Jan. 18. AT&T and Deutsche Telkom must file a status report on their proposed transaction, including whether or not they intend to proceed with it, by Jan. 12.
It's hard to figure just what "options" AT&T has after Friday's status conference on the case when the DOJ argued that the case should not proceed as is since AT&T had withdrawn  its merger application from the Federal Communications Commission. Judge Huvelle questioned AT&T's timetable and tactics, leading many to believe that the case could be delayed, which would be another serious blow to AT&T.
Rather than duking it out with the Department of Justice, which was expected to file a stay tomorrow in the Court proceedings, AT&T and Deutsche Telekom decided to step back and reevaluate the deal. In AT&T's press statement, the companies seem to indicate that they will be looking to restructure the deal.
"AT&T is committed to working with Deutsche Telekom to find a solution that is in the best interests of our respective customers, shareholders, and employees. We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals so that we can deliver the capacity enhancements and improved customer service that can only be derived from combining our two companies' wireless assets," the AT&T statement said.
From the moment AT&T announced its blockbuster deal to acquire T-Mobile, it caused a firestorm among public interest and consumer groups that argued the combination of the No. 2 and No. 4 wireless companies would harm consumers. Regulators agreed. The DOJ sued, and just before the FCC was set to send the deal to an administrative law judge, AT&T and DT pulled the application.
If the deal does not go through, AT&T must pay DT a $4 billion breakup fee.