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AT&T pulls T-Mobile application from FCC, records provisional $4bn loss

AT&T pulls T-Mobile application from FCC, records provisional $4bn loss


AT&T and Deutsche Telekom have withdrawn their application for approval from the FCC after the regulatory agency decided that a formal administrative hearing was required to assess the public benefit of their proposed merger of US assets. The move has been described as an effort to open up and reassess all options, however AT&T is also choosing to take a $4 billion charge on its Q4 2011 accounts just in case the takeover doesn't go through.

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The FCC's decision to request a formal administrative hearing into AT&T's proposed takeover of T-Mobile USA has caused the US carrier to take drastic action: AT&T and Deutsche Telekom have just announced that they're withdrawing their pending approval applications with the FCC. This is not to say that the companies are quitting on the deal, they specifically assert that they're "continuing to pursue the sale" of DT's US wireless assets, however AT&T's other move today is almost as significant.

The big blue mobile operator has decided to take a $4 billion pretax charge on its Q4 2011 accountancy sheet, in recognition of the risk of this deal not going through. That includes a $3 billion default payment that is due to Deutsche Telekom in the event of non-completion and an additional $1 billion in book value of spectrum that AT&T would have to give up. So, as far as AT&T's accountants are concerned, the failure of the $39 billion T-Mobile acquisition is now more likely than its success.

In a statement reported by Reuters, AT&T and Deutsche Telekom have described today's news as a tactical move intended to refocus their combined attention on obtaining approval from the US Department of Justice:

"This formal step today 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."

Thanks, DrpC!