A doomed deal? AT&T withdraws T-Mobile bid at the FCC

A doomed deal? AT&T withdraws T-Mobile bid at the FCCAT&T has withdrawn a key piece of its bid for T-Mobile. Though the move is said to be temporary, the massive merger is in serious trouble.

The Federal Communications Commission (FCC) has suggested for weeks that it had big problems with AT&T's $39 billion buyout of T-Mobile USA. On November 22, the FCC made its displeasure even clearer, forwarding the entire merger to an administrative law judge for review and demanding that AT&T prove the deal would be in the public interest.

Instead of doing this, AT&T has decided to take its ball and go home. Yesterday, the company withdrew its FCC application.

AT&T and T-Mobile owner Deutsche Telekom insisted in a statement (PDF) that the withdrawal would be temporary and that, "as soon as practical, AT&T Inc. and Deutsche Telekom AG intend to seek the necessary FCC approval."

What will they be doing in the meantime? Fighting off an antitrust lawsuit brought by the Department of Justice, the other government agency reviewing the deal. The companies will "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."

AT&T will also take a pretax charge of $4 billion dollars in the fourth quarter of this year—a move which accounts for the "breakup fee" it owes Deutsche Telekom if the deal falls apart.

Public Knowledge's Gigi Sohn, who has opposed the merger from the start, said today in a statement that "the chances that AT&T will take over T-Mobile are almost gone.... AT&T's move will, for the moment, prevent the FCC from making public its many, well-documented findings that the deal is not in the public interest and will prevent the judge overseeing the antitrust lawsuit from seeing the FCC's conclusions. Those findings would be the subject of the large and complex administrative hearing and process that AT&T would still need to survive in order to complete the $39 billion transaction."

Another opponent, the Media Access Project, called the move a "turkey" that is "too big to be hidden by releasing it on Thanksgiving. It is an act of desperation which will only hurt their shareholders by delaying the inevitable. 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."

Source: Ars Technica

Tags: AT&t, USA

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