AT&T Indicates T-Mobile Acquisition Likely to Fail, Takes $4B Charge
November 24, 2011 11:08 AM
comment(s) - last by
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 (
) acquire America's fourth largest carrier, Deutsche Telekom AG's (
) 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. (
) and Vodafone Group Plc. (
) -- 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
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
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's accountants expect the merger deal to fail.
Spencer Platt / Getty Images
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. (
). 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 (
Business Wire (Yahoo! Finance)
This article is over a month old, voting and posting comments is disabled
RE: That bit at the end...
11/24/2011 8:28:00 PM
I wasn't suggesting that in any way, but all these people saying that any company should be able to just start a cell phone company should realize that THEY are expecting that Verizon and AT&T should just open their PRIVATELY owned networks to any other business.
"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
7 U.S. States Side with DOJ Against AT&T/T-Mobile Merger
September 19, 2011, 9:54 AM
AT&T Admits Consumers May See Some Harm if It's Granted GSM Monopoly
September 12, 2011, 8:53 AM
AT&T Fights DOJ to Engulf T-Mobile, Gain U.S. Monopoly on GSM
September 2, 2011, 11:22 AM
DOJ Files Paperwork to Kill AT&T/T-Mobile Merger; AT&T, Sprint Respond
August 31, 2011, 11:21 AM
Leaked Doc. Reveals AT&T's "Chewbacca Defense" of T-Mobile Merger
August 15, 2011, 1:10 AM
Moto 360 to go "Champagne Gold" for $299, According to Amazon Listing
October 30, 2014, 3:24 PM
Call-capable Samsung Gear S Smartwatch Launches Nov 7 in U.S.
October 30, 2014, 12:45 PM
Lenovo Completes $2.91B Acquisition of Motorola
October 30, 2014, 11:57 AM
Samsung Electronics Q3 Profit Falls by 60%, Mobile Division Sees 74% Profit Decline
October 30, 2014, 10:10 AM
Microsoft's $199 Fitness Band Packs in 10 Sensors, Works with Windows Phone, iOS, and Android
October 30, 2014, 8:58 AM
Google’s Project Ara Modular "LEGO" Smartphone Shown Booting Up on Video
October 29, 2014, 5:28 PM
Most Popular Articles
1 Million Credit Card Activated on Apple Pay Within 72 Hours, Walmart CEO Hopes Visa "Suffers"
October 28, 2014, 8:17 AM
Amid Theater Boycott Netflix Defiantly Plans New Movies, Plus 3 TV Shows for 2015
October 24, 2014, 7:30 PM
CVS, Rite Aid Kill Unofficial Apple Pay Support, Burn Google Wallet Users in the Process
October 25, 2014, 5:26 PM
Microsoft's Figures Show Desktop Users Flocking to Windows 10 Preview
October 27, 2014, 11:04 AM
Fitbit's $249 Surge Fitness Watch Packs 7-Day Battery Life, Two Other Models Also Air
October 27, 2014, 4:20 PM
Latest Blog Posts
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information