AT&T and T-Mobile Withdraw FCC Application For Merger
AT&T and T-Mobile USA officially withdrew their application to the Federal Communications Commission to join their mobile phone operations and AT&T announced it will set aside $4 billion in the final quarter of 2011 to reflect the potential breakup fee due T-Mobile’s parent Deutsche Telekom if the deal fails to go through. The $4 billion fee would consist of $3 billion in cash and $1 billion in spectrum.
These actions followed Tuesday’s announcement by the FCC that it will move to block the deal from going through.
The merger, which was to combine the country’s second- and fourth-largest mobile phone operators, was controversial from the beginning. The two companies have maintained throughout that the deal would not lessen competition in the marketplace and that it would create more jobs in the U.S. But the Department of Justice said that the merged entity would in fact significantly constrain competition and reported that AT&T’s own internal documents indicated that the merger would eliminate jobs instead of adding them.
AT&T issued a statement saying that the companies were taking this step “to facilitate the consideration of all options at the F.C.C.,” as well as to consider other options. In a separate statement, Deutsche Telekom said that today’s withdrawal of the FCC application” 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. As soon as practical, Deutsche Telekom and AT&T intend to seek necessary F.C.C. approval.”