AT&T looks like it might be ready to give up on its $39 billion proposed acquisition of T-Mobile.
AT&T looks like it might be ready to give up on its $39 billion proposed acquisition of T-Mobile. Staggering from the Federal Communications Commission's likely rejection of the deal, AT&T announced on Thanksgiving Day that it has withdrawn its application with the agency. AT&T also said it would take a $4 billion pretax accounting charge, which covers the $3 billion-negotiated break up fee with T-Mobile.
On Tuesday, FCC senior officials said the combination of the two companies would significantly diminish competition and "would result in a massive loss of U.S. jobs and investment." Unable to approve the merger, the FCC's review was headed for an administrative law hearing, a lengthy legal process that would have dragged out the approval procedures beyond the drop-dead date to close the deal with T-Mobile.
AT&T isn't entirely giving up on the deal. In a last ditch effort, AT&T said it would continue to defend the $39 billion merger in court. The case, brought by the Department of Justice, begins Feb. 13.
"AT&T Inc. and Deutsche Telekom AG are continuing to pursue the sale of Deutsche Telekom’s U.S. wireless assets to AT&T and are taking this step to facilitate the consideration of all options at the FCC and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice either through the litigation pending before the United States District Court for the District of Columbia, Case No. 1:11-cv-01560 (ESH), or alternate means. As soon as practical, AT&T Inc. and Deutsche Telekom AG intend to seek the necessary FCC approval," the company said in a statement.
Public interest groups, which opposed the merger, called AT&T's move "an act of desperation."
"It is time for vainglorious managers at AT&T to accept that there is no way that this deal can obtain approval of the FCC and the courts," said Andrew Schwartzman, svp and policy director for the Media Access Project.
Analysts agree it is time for AT&T to stick a fork in it. "All in all, we view this as a step toward concession," said a Bernstein Research Report.