AT&T & T-Mobile Deal Could Be Dead in the Water

AT&T recently withdrew a large part of its bid for T-Mobile. The company says that the business move is only temporary, but it certainly looks like the merger is in hot water.

The Federal Communications Commission (FCC) has suggested for weeks that it wasn’t comfortable with AT&T’s buyout of T-Mobile. On November 22, the FCC made it even more obvious that they didn’t want the deal to go through, sending the whole merger plan to an administrative law judge for review and mandating that AT&T prove that the deal would be in the best interest of the public.

Instead of jumping through all of the loops, AT&T has given up. Recently the company withdrew its FCC application for the merger.

Is It Temporary?

AT&T and T-Mobile owner Deutsche Telekom promised in a statement that the deal withdrawal is only very temporary and that, “as soon as practical, AT&T Inc. and Deutsche Telekom AG intend to seek the necessary FCC approval.” And what will the company be doing while they wait to re-file? Well they have to deal with the antitrust lawsuit that the Department of Justice has filed; the DOJ also decided to reign in on 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 is also planning to take pretax charge of $4 billion dollars in the final quarter of this year – a deal which would handle the “breakup fee” that it would owe Deutsche Telekom if they can’t make the deal happen.

Public Knowledge's Gigi Sohn, who has been against the acquisition since it was announced, said recently 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."

Too Big a Turkey

Another opponent of the move, 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.”

Analysts in the telecom industry were wary of the deal from the start. A giant like AT&T trying to buy up a smaller competitor was sure to draw the criticism of the DOJ and FCC, lest AT&T should become a monopoly.