Looks like FCC Chairman Julius Genachowski's request for a formal hearing on AT&T's proposed acquisition of T-Mobile may have had a bit of an effect. AT&T has announced that it and Deutsche Telekom have formally withdrawn their application related to the deal's approval that was submitted back in April. Interestingly, AT&T went on to say that because of the FCC's request for a hearing, it's added a $4 billion charge into its Q4 2011 financials to reflect the amount it would owe should the deal fail to be approved. That $4 billion breaks down into $3 billion in cash and $1 billion worth of spectrum.
All of this doesn't necessarily mean that AT&T and Deutsche Telekom are just giving up on the deal, though, as AT&T specifically says that the two companies are continuing pursuit of the sale of DT's assets. AT&T explains that it's withdrawn the FCC application in order to step back and reconsider all of its options with the government agency and will refile the application "as soon as practical." The carrier added that it plans to focus on winning the antitrust case that the U.S. Department of Justice has filed against it, either through the court case that's already pending or through alternate means.
Today's news is some of the biggest that we've seen come out of the AT&T-Mobile deal since it was announced back in March. Obviously the proposed acquisition is still very much on the table, but AT&T and Deutsche Telekom's moves give off the vibe that they're not quite as confident about the merger's approval as they may have once been. It'll be interesting to see how opponents of the acquisition react to today's news (I bet Sprint is having a happy Thanksgiving) and how the deal progresses going forward. As usual, we'll keep you up to date as the story continues to play out, so stay tuned!
AT&T and Deutsche Telekom Continue to Pursue Sale of DT's U.S. Wireless Assets
Companies Withdraw FCC Applications; AT&T Expects to Recognize $4 Billion Charge; Companies Focus on Gaining DOJ Approval
Dallas, Texas, November 24, 2011
On Nov. 22, 2011, the Federal Communications Commission indicated a proposed order was circulating that would designate for hearing the applications of AT&T Inc. and Deutsche Telekom AG For Consent To Assign or Transfer Control of Licenses and Authorizations, WT Docket No. 11-65. On November 23, 2011, AT&T Inc. and Deutsche Telekom AG electronically withdrew without prejudice, as of that date, the pending applications listed in the Public Notice released by the Federal Communications Commission on April 28, 2011 in that proceeding. Associated manual notification of withdrawal filings also are being made.
AT&T Inc. and 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, Case No. 1:11-cv-01560 (ESH) or alternate means. As soon as practical, AT&T Inc. and Deutsche Telekom AG intend to seek the necessary FCC approval.
As a result of the FCC’s action, AT&T expects to recognize a pretax accounting charge of $4 billion ($3 billion cash and $1 billion book value of spectrum) in the 4th quarter of 2011 to reflect the potential break up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval.
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