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
11/25/2011 2:18:36 AM
Easy way - let AT&T purchase T-Mobile. Most T-Mobile employees keep their jobs. AT&T gains spectrum. Coverage improves, rates increase.
Hard way - prevent AT&T from purchasing T-Mobile. T-Mobile goes out of business, because Deutsche telecom has already pledged not to spend any more money on T-Mobile's network and T-Mobile has no spectrum to expand. Employees lose their jobs. AT&T buys remainder of business and spectrum. Coverage improves, rates increase.
Either way, it is going to happen.
"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone
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
Microsoft "Hopes" Developers Will Make Xbox One Games Unplayable Offline
May 24, 2013, 12:13 PM
Federal Judge Sides with U.S. DOJ in Apple E-Books Preliminary Hearing
May 24, 2013, 11:46 AM
HTC Considers "Senseless" One Smartphone
May 24, 2013, 8:00 AM
HTC One Hits 5 Million Sales in First Month, Despite Issues
May 23, 2013, 4:04 PM
HTC First's Arrival in UK Canceled, Facebook Assesses "Home" Feedback
May 23, 2013, 3:02 PM
Microsoft Expands Windows Azure in Asia, Mocks iPad in New Commercial
May 23, 2013, 12:06 PM
Most Popular Articles
High School Student Creates Storage Device that Can Charge in 20 Seconds
May 20, 2013, 6:51 AM
Apples Tries to Use Decade-Old Patents to Ban Samsung Galaxy S IV
May 22, 2013, 3:00 PM
NASA Awards $125,000 Grant for 3D Printed Food on Long-Term Space Travels
May 21, 2013, 1:32 PM
Microsoft Announces Voice-Controlled "Xbox One"
May 21, 2013, 12:55 AM
Cure For Baldness Could Be on Store Shelves within Two Years
May 22, 2013, 8:29 AM
Latest Blog Posts
Lumosity: Does it Work?
May 22, 2013, 8:20 PM
Quick Note: Sony "Teases" PS4 Ahead of Xbox Reveal in New Video
May 20, 2013, 12:33 PM
Nokia Introduces Instagram-Like App of Its Own to Help Lumia Sales
May 20, 2013, 7:10 AM
Parents of Pre-Teen Drivers Commonly Practice Distracted Driving Says Study
May 9, 2013, 7:16 AM
Apple's iOS 7 Running Into Internal Delays Due to Massive Overhaul
May 1, 2013, 4:26 PM
More Blog Posts
Copyright 2013 DailyTech LLC. -
Terms, Conditions & Privacy Information