AT&T T-Mobile merger hits stumbling block, AT&T looking at $4bn bill

The mega merger that could see US mobile phone networks AT&T and T-Mobile become one in the US, looks like it isn’t going to happen after all.

Although both companies say that they are continuing to pursue the sale of Deutsche Telekom owned T-Mobile’s US wireless assets, the companies have withdrawn their application to the FCC (Federal Communications Commission).

The move comes after Julius Genachowski, the FCC Chairman, said that the merger did not meet the commission’s standards for approval.

While the deal without the FCC's approval is still possible, it would have been considerably easier with it.  

Instead the companies will try and focus their efforts on convincing the DoJ to approve the deal.

“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,” the two said in a rather dull statement.

AT&T also warned that it could now have to pay T-Mobile a whopping $4 billion for failing to get the deal approved.

“As a result of the FCC’s action, AT&T expects to recognize a pretax accounting charge of $4 billion ($3 billion cash and $1 billion book value of spectrum) in the 4th quarter of 2011 to reflect the potential break up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval.”

Announced in March 2011, experts have always said that getting approval for the $39bn deal would be hard.

The merging of the two operators would create America’s largest mobile network, with some 129 million customers and a network that covered 95 per cent of the US population, something neither company would be able to achieve on its own.



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