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AT&T, T-Mobile Merger Deal Falters

Tracy Bloom |
November 24, 2011 | 1:31 p.m. PST

Executive Editor

AT&T and T-Mobile logos merged together. Photo courtesy of Creative Commons.
AT&T and T-Mobile logos merged together. Photo courtesy of Creative Commons.
AT&T and T-Mobile USA have temporarily withdrawn their FCC application to merge following difficulties to get the government to consent to the deal. According to The Los Angeles Times, the two companies will focus on gaining approval from the Justice Department first.

The decision to withdraw the application, “is a tacit acknowledgment by AT&T that this story is all but over,” said analyst Craig Moffett. “The fat lady hasn’t started singing yet, but she’s holding the mike and the band is about to play.”

In another sign that the possible $39 billion acquisition of T-Mobile USA is more likely than not to fail, The Wall Street Journal reported that AT&T is also setting aside $4 billion for potential breakup fees.

CNN Money reported:

The move comes two days after the Federal Communications Commission took the unusual step of recommending that AT&T's proposed $39 billion takeover of T-Mobile go to an administrative hearing. The maneuver, a sign of opposition to the deal, makes the FCC the second regulatory to object.

The Department of Justice filed an antitrust lawsuit in August to block the merger. AT&T and Deutsche Telekom AG, the parent company of T-Mobile, are preparing to go to trial on the case in February.

According to The New York Times:

The application withdrawal appears in part designed to prevent the F.C.C. from making public AT&T and T-Mobile records about the potential effects of the merger, records that could then be used by the Justice Department in the antitrust trial.

"AT&T's move will, for the moment, prevent the FCC from making public its many, well-documented findings that the deal is not in the public interest and will prevent the judge overseeing the antitrust lawsuit from seeing the FCC's conclusions," said Gigi B. Sohn, the president of the advocacy group Public Knowledge.

AT&T and T-Mobile have said that the merger would not lessen competition, and that it would also help create jobs in the U.S. However, officials from the FCC and the Justice Department have disagreed with both of these claims.



 

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