backtop


Print

AT&T and T-Mobile say they will continue to fight for the deal, but AT&T's accountants say it's likely to fail

AT&T, Inc.'s (T) acquire America's fourth largest carrier, Deutsche Telekom AG's (ETR:DTE) T-Mobile USA, could have been a blockbuster deal.  Had U.S. regulators bought into it, it would have made AT&T the largest wireless carrier in America and granted it a virtual monopoly on GSM (3G) service in the U.S.  The move would have left only three large nationwide carriers in the U.S., with two of them -- AT&T and Verizon Wireless, a joint venture between Verizon Communications, Inc. (VZ) and Vodafone Group Plc. (LON:VOD) -- holding a dominant 80 percent of the market.  Now it looks like acquisition may be dead.

But in regulatory court AT&T struggled to defend the deal, particularly when it came to proving that the deal would create jobs and consumers wouldn't be harmed.  At the end of August the U.S. Department of Justice delivered the first bad news for AT&T -- it was suing to block the merger.  AT&T vowed to fight the U.S. government in court, recruiting expensive antitrust lawyers.  Meanwhile state Attorney Generals began to come out for and against the merger, setting the stage for a grand battle.

That battle may never occur now.  On Tuesday a second U.S. government agency vowed to fight the merger.  U.S. Federal Communications Commission Chairman Julius Genachowski said he had "serious concerns" about the merger's affect on consumers.  He threatened to hold a second "hearing-like" trial, should AT&T manage to defeat the Justice Department in court.  

While business experts viewed the move as weaker than the DOJ's action, it appears to have been enough to do the trick.  AT&T and Deutsche Telekom have announced their decision to withdraw pending approval application with the FCC, in a move that may signal the end of Ma Bell's acquisition bid.

While both companies claim they're "continuing to pursue the sale", AT&T's accountants have taken a $4B USD pre-tax charge (loss) on its Q4 2011 sheet.  That charge covers the $3B USD in cash and $1B USD in spectrum that AT&T owes Deutsche Telekom if the deal fails.  Under U.S. accounting rules, placing such a charge means that accountants believe the event in question to be the most likely outcome.  In other words, AT&T now has indicated formally that the deal is unlikely to succeed.

AT&T party
AT&T's accountants expect the merger deal to fail.
[Image Source: 
Spencer Platt / Getty Images]

Commenting to Reuters AT&T and T-Mobile promise to throw whatever remaining strength they have behind fighting the DOJ lawsuit, ignoring -- for now -- the FCC complaint.

AT&T and T-Mobile state, "This formal step today is being undertaken by both companies to consolidate their strength and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice." 

Experts are now indicating that even if the AT&T deal fails, T-Mobile will likely try to sell the unit at a discount to Sprint Nextel, Corp. (S).  Alternatively it could opt to try to keep the struggling carrier, or to try to spin it off, perhaps merging it with a smaller profitable carrier like U.S. Cellular (USM).

Sources: Business Wire (Yahoo! Finance), Reuters, WSJ





"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer



Latest Headlines
How Apple watch Series 2 differ from the S1
February 18, 2017, 5:37 AM
Chuwi LapBook
February 6, 2017, 6:49 AM
LG Watch Style
February 5, 2017, 8:00 AM
New iMac and Release Date
February 4, 2017, 9:30 AM




Latest Blog Posts
Around the World
Saimin Nidarson - Feb 18, 2017, 5:48 AM
News of Future
Saimin Nidarson - Feb 17, 2017, 6:30 AM
Some News
Saimin Nidarson - Feb 14, 2017, 5:36 AM
What's New?
Saimin Nidarson - Feb 10, 2017, 6:15 AM
Unleashed News
Saimin Nidarson - Feb 9, 2017, 6:00 AM
Eye catching news
Saimin Nidarson - Feb 8, 2017, 6:16 AM
Some World News
Saimin Nidarson - Feb 7, 2017, 6:15 AM
Today’s news
Saimin Nidarson - Feb 6, 2017, 10:11 AM
Some News
Saimin Nidarson - Feb 5, 2017, 7:27 AM
Notes and News
Saimin Nidarson - Feb 4, 2017, 5:53 AM
World News
Saimin Nidarson - Feb 3, 2017, 5:30 AM
Gadget News
Saimin Nidarson - Feb 2, 2017, 7:00 AM
News Around The World.
Saimin Nidarson - Feb 1, 2017, 7:20 AM
Some News
Saimin Nidarson - Jan 31, 2017, 7:57 AM
Tips of Today
Saimin Nidarson - Jan 30, 2017, 6:53 AM
What is new?
Saimin Nidarson - Jan 29, 2017, 6:26 AM






botimage
Copyright 2017 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki