AT&T Backing Down on FCC Application For Merger With T-Mobile

AT&T apparently realizes when it is in an uphill battle because they have decided to withdraw their Federal Communications Commission (FCC) application to acquire T-Mobile USA. The reason being that the FCC's chairman Julius Genachowski would have required a lengthly and costly Administrative hearing on the merits of the merger. This hearing would take place after the Department of Justice's antitrust lawsuit which definitely will be an epic court battle between government and big business.

The main reason the FCC wanted to hold an administrative hearing is because they are skeptical that the AT&T T-Mobile merger would actually create jobs as AT&T continually promises that the deal would. This is despite evidence to the contrary where when corporations merge jobs are slashed to reduce duplicate positions.

AT&T is not giving up the fight just yet in their bid to acquire T-Mobile USA, especially in light of the fact they will owe the latter approximately $3 billion in a breakup fee if the merger is not closed by September of 2012.

AT&T is not completely walking away from the merger, rather they are putting their resources to use in the most practical manner possible. The company will focus its efforts on the upcoming battle with the DOJ first.

Here's the full Press Release:


AT&T and Deutsche Telekom Continue to Pursue Sale of DT’s U.S. Wireless Assets

Companies Withdraw FCC Applications; AT&T Expects to Recognize $4 Billion Charge; Companies Focus on Gaining DOJ Approval

On Nov. 22, 2011, the Federal Communications Commission indicated a proposed order was circulating that would designate for hearing the applications of AT&T Inc. and Deutsche Telekom AG For Consent To Assign or Transfer Control of Licenses and Authorizations, WT Docket No. 11-65. On November 23, 2011, AT&T Inc. and Deutsche Telekom AG electronically withdrew without prejudice, as of that date, the pending applications listed in the Public Notice released by the Federal Communications Commission on April 28, 2011 in that proceeding. Associated manual notification of withdrawal filings also are being mad

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.

As a result of the FCC’s action, AT&T expects to recognize a pretax accounting charge of $4 billion ($3 billion cash and $1 billion book value of spectrum) in the 4th quarter of 2011 to reflect the potential break up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval.