AT&T’s T-Mobile Acquisition May Not Pass Regulatory Scrutiny
By on November 24th, 2011

AT&TAT&T has been trying to acquire T-Mobile for $39 billion since March 2011. The announcement was a surprise for everyone, and the acquisition would have created the largest telecom provider in the United States, far ahead of its competitors in terms of subscribers. Naturally, there were going to be some regulatory hurdles in a deal of this size.

Today, we have an update from AT&T which indicates that the deal might be in jeopardy. AT&T has set aside $4 billion for accounting charges, should the deal go south and it has to pay T-Mobile’s parent Deutsche Telekom a breakup fee.

The Federal Communications Commission recently recommended that there be an administrative hearing to approve this deal. The DoJ had also filed a lawsuit to block the acquisition, on grounds that it would be harmful for consumers.

Today, AT&T announced that it was withdrawing its applications from the FCC for now, in order to focus on getting the deal cleared by the DoJ first.

AT&T Inc. and Deutsche Telekom AG (DTE) 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,AT&T said.

In case the deal doesn’t go through, the total value of the breakup package for Deutsche Telekom is estimated to be around $7 billion.

While this move by the two companies doesn’t mean that the deal is dead, it surely indicates that the chances of successfully completing it have decreased significantly.

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Author: Pathik Google Profile for Pathik
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Pathik has written and can be contacted at pathik@techie-buzz.com.

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