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You are here: Home / Communications / AT&T, T-Mobile Are Not Giving Up
AT&T, T-Mobile Aren't Giving Up on Merger
AT&T, T-Mobile Aren't Giving Up on Merger
By Barry Levine / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
The AT&T move to merge with T-Mobile is entering a new phase. Even with the Federal Communications Commission (FCC) chairman and the Department of Justice opposed to the deal, the companies are not giving up.

Last week, after FCC Chairman Julius Genachowski came out against the $39 billion merger and asked his board to refer the application to an administrative judge, AT&T and Deutsche Telekom AG, T-Mobile's owner, withdrew their pending application -- but it appears they are not abandoning their effort.

Removal of 'Competitive Force'

Genachowski had said his decision was based on review by the agency of hundreds of thousands of documents, dozens of petitions opposing the merger, and meetings with both companies. He contended that the deal would lead to higher prices for consumers and large job losses.

DOJ had filed an antitrust lawsuit against AT&T in August, with the hearings before a federal judge beginning in February. Justice had said that "the elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market." Many observers had speculated that the one-two punch of the FCC and the Justice Department, if either and certainly if both succeeded in their legal actions, would most likely be enough to kill the merger.

But, on Thanksgiving, the companies announced in a statement that they are "continuing to pursue" the sale, and are focusing their efforts on "obtaining antitrust clearance for the transaction from the Department of Justice," either through the DOJ litigation currently pending in federal court, "or alternative means."

There are reports the company is prepared to sell as much as 40 percent of T-Mobile USA, if that would help obtain approval by the regulatory agencies. However, a key reason cited by AT&T for the merger is to obtain T-Mobile's spectrum, and divesting part of the company would seem to divest a large part of that spectrum.

FCC Will 'Consider' Withdrawal

In the meantime, AT&T said it will record a pretax accounting charge of $4 billion for the fourth quarter, which are the fees it owes Deutsche Telekom if the deal does not go through.

According to a filing by AT&T, Genachowski made a surprise phone call to AT&T CEO Randall Stephenson and Deutsche Telekom AG CEO Rene Obermann on Nov. 22 to inform them of his decision to recommend that the FCC board refer the application to a judge, in order to block the deal.

On Nov. 23 both companies withdrew their applications, and the FCC said the next day that it would "consider" the request for withdrawal.

AT&T is none too pleased at that response by the federal agency. Its general counsel, Wayne Watts, said in a statement Friday that the company has "every right to withdraw our merger from the FCC, and the FCC has no right to stop us."

The company has said it will sue the FCC if its withdrawal is not allowed. By withdrawing its application, the company appears to be trying to head off its referral by the FCC board to a judge, who has the authority to deny the application.

Read more on: AT&T, T-Mobile, Deutsche Telekom, FCC
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