AT&T withdraws FCC application for T-Mobile acquisition

In another blow to AT&T's (NYSE:T) attempt to acquire T-Mobile USA, AT&T announced it withdrew its merger application at the FCC in order to focus its efforts on obtaining antitrust approval for the deal. AT&T also announced it will take a pretax accounting charge of $4 billion ($3 billion in cash and $1 billion in spectrum) in the fourth quarter "to reflect the potential break-up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval."

AT&T and T-Mobile parent Deutsche Telekom said they plan to re-file their merger proposal with the FCC after obtaining approval from the Department of Justice.

"What that tells you is AT&T's auditors have now concluded that the deal is likely to fail and have forced the company to take that charge," Will Draper, an analyst at Espirito Santo, told Bloomberg.

The New York Times noted that the withdrawal of the companies' merger application at the FCC could be partly a way to prevent the Justice Department from obtaining records about the proposed merger. Such documents could aid in the Justice Department's case against the merger.

AT&T announced in March a plan to acquire Deutsche Telekom's U.S. wireless business for $39 billion, but the effort has faced a number of significant obstacles. The Justice Department in August announced plans to sue to block the deal, and earlier this week the FCC said it would seek an administrative law hearing on the deal--an action that reflects the agency's deep concerns about the transaction.

If the deal collapses, AT&T would owe Deutsche Telekom around $6 billion in cash, spectrum and roaming agreements.

For more:
- see this release
- see this NTY article
- see this Bloomberg article

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