AT&T Pulls FCC Application in $39 Billion T-Mobile Merger

AT&T’s (NYSE: T) bid to buy T-Mobile from parent company Deutsche Telekom has taken another turn for the worse.  The U.S. telecom giant has withdrawn its FCC merger application just days after FCC Chairman Julius Genachowski made it known publicly that he would oppose the merger on anti-trust grounds.  AT&T said that they would concentrate on allaying the fears of the U.S. Justice Dept. which has sued to halt the merger.

If it were allowed to go through the merger would create the largest provider of cell phone service in the country having nearly 75% of all subscribers and 80% of revenues.  Given that the likelihood of the deal making it past both the FCC and the Justice Dept. looks grim at this point AT&T said that they would be taking a $4 billion charge billed against the 4th Quarter to account for break-up fees as per the terms of the deal in case of a break-up.

Deutsche Telekom has stated publicly that it no longer wishes to operate in the U.S. market so, even though this current deal looks to be all but dead, it would come as no surprise to anyone if some other version of it surfaces in the future.  Withdrawing the FCC application protects AT&T from disclosure by the Justice Dept. during any lawsuit.

Shares of AT&T closed down $0.06 on Friday to close at $27.44.

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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