AT&T braces for T-Mobile deal collapse

AT&T said it would take a $4 billion charge in case its take-over of T-Mobile USA fails, reflecting the dwindling chances for the deal seen as job-destroying by powerful political opponents. The US telecoms group and T-Mobile owner Deutsche Telekom, said they would continue to pursue anti-trust approval for the $39 billion take-over from the US Department of Justice but withdrew for now applications to the industry regulator.
"AT&T Inc and Deutsche Telekom AG are continuing to pursue the sale of Deutsche Telekom's US wireless assets to AT&T," they said in a statement on Thursday, the Thanksgiving holiday in the United States. Both the DOJ and telecoms watchdog the Federal Communications Commission oppose the deal, which would reduce the number of national mobile carriers to three while consumers are struggling to make ends meet and unemployment rises.
FCC approval would be meaningless if the DOJ blocked the deal, and AT&T and Deutsche Telekom said they would return to the FCC process if they secured approval from the DOJ. Analysts said the merger, badly needed by sub-scale T-Mobile USA - the smallest of the four US national mobile operators - looked less likely than ever to succeed. Espirito Santo analysts said AT&T's decision to take the $4 billion charge this quarter showed the company's own assessment of the chances of success had fallen, causing its auditors to force the company to take the hit now.
"It tells us something about timing too - suggesting that AT&T may decide to walk away at the first opportunity (March 20 2012) rather than waiting for the ultimate September 20 2012 deadline," they wrote in a note to clients. Deutsche Telekom shares were up 0.2 percent to 8.76 euros by 1315 GMT, broadly in line with the European telecoms index, which was up 0.5 percent.
Today's decision follows a blow earlier this week when the FCC said it would try to send the deal to an administrative law judge for review. The FCC says the merger would result in a massive loss of US jobs and investment, and significantly diminish competition, while the DOJ says it would lead to higher wireless prices for consumers and businesses.