Sunday, November 27, 2011

AT&T Withdraws Merger Application

On Thursday, November 24 AT&T announced that it withdrew the application that it submitted to the Federal Communications Commission in order to acquire T-Mobile. With this withdrawal there will be more than $4 billion in “break-up” fees.

AT&T made sure to clarify that although it did withdraw the application which was submitted to the FCC, the deal is not dead. The company claims that instead it will focus on the antitrust lawsuit that the Department of Justice brought forward. The lawsuit is seeking to block the merger, due to the concern about competition issues.

"AT&T Inc. and [T-Mobile parent company] 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 ... or alternate means," AT&T said in a statement. "As soon as practical, AT&T Inc. and Deutsche Telekom AG intend to seek the necessary FCC approval."

The decision to withdraw the merger application came just two days after Julius Genachowski, the chairman of the FCC, suggested that the merger was not in the interest of the public and advised the other commissioners to send the merger application for review to an administrative judge.

"The record clearly shows that—in no uncertain terms—this merger would result in a massive loss of U.S. jobs and investment," said a senior FCC official.

The chairman basically recommended that the deal be rejected; however, it is important to note that the FCC cannot technically block a deal. The FCC only has the ability to approve, approve with conditions or refer to an administrative law judge. When the FCC was reviewing the deal, they said that if AT&T and T-Mobile were to merge, the result would be massive layoffs. The case will go to trial in February.

There are several different consumer groups that feel that the withdraw of the merger application is meant as a last effort to save the merger.

"After today's actions, the chances that AT&T will take over T-Mobile are almost gone," President and Co-founder of Public Knowledge Gigi B. Sohn said in a statement. "While you can never count out AT&T entirely, the fact that they pulled their FCC application speaks volumes about the company's lack of confidence that it could prove in a legal setting at the Federal Communications Commission (FCC) the claims it spent millions of dollars to make about job creation and rural deployment of broadband, among other issues."

Sohn said that she believes that AT&T is attempting to "prevent the FCC from making public its many, well-documented findings that the deal is not in the public interest."

The Senior Vice President and Policy Director of Media Access Project Andrew Jay Schwartzman said that this decision from AT&T is an "act of desperation." "It is time for vainglorious managers at AT&T to accept that there is no way that this deal can obtain approval of the FCC and the courts," he said.

Source: PCMag - AT&T Pulls T-Mobile Merger Application From FCC, Will Take $4B Charge

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