Reports are that AT&T will likely give up on the $39 billion T-Mobile acquisition. AT&T recently announced that it was withdrawing its FCC application, and that it would take a $4 billion pretax accounting charge, covering the $3 billion-negotiated break up fee with T-Mobile.
FCC senior officials recently said that combining AT&T and T-Mobile would hurt competition and result in a massive loss of U.S. jobs. The FCC review was headed for an administrative law hearing, an extended legal procedure that would have pushed the approval procedure beyond the proposed date to finalize the deal with T-Mobile.
AT&T isn’t surrendering on all fronts, vowing to defend the $39 billion merger in court against the Department of Justice. “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,” read a statement by AT&T. “As soon as practical, AT&T Inc. and Deutsche Telekom AG intend to seek the necessary FCC approval.”
Andrew Schwartzman, svp and policy director for the Media Access Project thinks that AT&T should hang it up. “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,” he said.
Analysts agree with the pessimistic evaluation. “All in all, we view this as a step towards concession,” said a Bernstein Research Report.