AT&T foresees T-Mobile merger to fail, claims $4 billion in charges

Summary:AT&T is expecting its T-Mobile acquisition plans to fail, after the FCC hinted it would not back the deal. But the U.S.' largest network will be hit with $4 billion in costs should the deal fail.

AT&T and Deutsche Telekom, the German owner of T-Mobile USA, have withdrawn their application for FCC approval ahead of a planned $39 billion deal, in order to focus its efforts on seeking approval from the U.S. Department of Justice.

While this is as close to an admission at this stage that both AT&T and Deutsche Telekom know that the deal will not go ahead, AT&T is seeking to book a $4 billion charge in the fourth quarter should the acquisition not go ahead.

Even though at this stage it seems the two telecoms giants are expecting the deal to fall flat, AT&T is biting the bullet now rather than suffering greater losses later down the line*.

But AT&T says that it is not the end of its acquisition plans. The U.S.' largest cellular network said that it would re-attempt FCC approval subject to a green-light by the U.S. Department of Justice.

The U.S. Justice Dept. in August added its weight to the opposition, by suing AT&T in a bid to prevent the merger from going ahead, based on grounds that it could be an anti-competitive move and violate antitrust laws, a trial expected for mid-February 2012.

A green light from the U.S. Justice Dept. is therefore unlikely.

The FCC has been reviewing the deal for several months; halting the investigation in July after the regulatory body requested further details on plans to acquire T-Mobile USA.

Only yesterday it was reported that the FCC's latest move could spell even more trouble for the two parties wanting to merge, after a long line of network carriers and advocacy groups rejected the deal.

* Update: AT&T will lose $4 billion, not collect. Edited to clarify.

Related:

Topics: Mobility, AT&T

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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