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 8:52:27 PM
If T-mobile were to merge and/or be sold to a smaller but profitable regional carrier, the merger might just prove to be the 4th national carrier to compete with the "Big 3", that T-mobile could be.
"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken
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
Quick Note: Toshiba to Restructure PC Business, Cut 900 Jobs Worldwide
September 18, 2014, 1:40 PM
Samsung Galaxy Note 4 U.S. Pre-orders Start Sept 19, Launches Oct 14
September 18, 2014, 10:15 AM
Amazon Releases New and Refreshed Kindle Fire Tablets, Announces Fire OS 4
September 17, 2014, 10:23 PM
Apple Launches iOS 8 for iPads, iPhones
September 17, 2014, 1:54 PM
Apple Cripples NFC in iPhone 6, 6+ With Developer Ban
September 17, 2014, 1:00 PM
5.7" ZTE ZMAX "Phablet" Coming to T-Mobile Sept 24 for $252
September 17, 2014, 11:50 AM
Most Popular Articles
Quick Note: Buy an Xbox One Sept 7-13, Get a Free Game
September 4, 2014, 10:42 AM
Apple Announces Its Smartwatch: The $349 Apple Watch
September 9, 2014, 2:09 PM
Dell Announces "World's Thinnest" Tablet: The Venue 8 7000 Series
September 11, 2014, 8:51 AM
Windows 9's Latest Metro Start Menu Leaks, German Site Accidentally Outs Leaker
September 11, 2014, 8:36 PM
T-Mobile Launches Un-carrier 7.0, Beefs Up Wi-Fi Calling
September 11, 2014, 2:56 PM
Latest Blog Posts
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
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information