Deutsche Telekom, the parent of T-Mobile, and ATT said in a joint statement that they still intended to pursue the $39 billion merger and would prepare for a federal antitrust lawsuit that is seeking to block the deal.
But the companies also said that ATT planned to take a $4 billion charge against earnings to reflect the potential breakup fees that ATT would have to pay Deutsche Telekom if the deal failed to go through.
The actions followed the decision earlier this week by Julius Genachowski, the F.C.C. chairman, that the merger did not meet the commission’s standard for approval. Mr. Genachowski sent other commissioners a proposed order to refer the case to an administrative law judge, the first step toward a commission move to block the deal, which would combine the second- and fourth-largest cellphone carriers in the United States.
The application withdrawal appears in part designed to prevent the F.C.C. from making public ATT and T-Mobile records about the potential effects of the merger, records that could then be used by the Justice Department in the antitrust trial.
The companies have maintained publicly that the deal would not lessen competition and that it would create jobs in the United States. But the Justice Department has said that the merger would severely restrict competition, and F.C.C. officials have said that ATT’s confidential filings indicate the merger would eliminate jobs.
The withdrawal of the F.C.C. application “is a tacit acknowledgment by ATT that this story is all but over,” said Craig Moffett, an analyst at Sanford C. Bernstein. “The fat lady hasn’t started singing yet, but she’s holding the mike and the band is about to play.”
The efforts by the Justice Department’s antitrust division and the F.C.C. to block the merger reflect a reinvigoration of federal efforts to rein in excessive business practices after a prolonged period of deregulation that preceded the 2008 financial crisis.
President Obama came into office pledging to take a harder look at the antitrust implications of proposed mergers, but the Justice Department was criticized by consumer groups in its first year for appearing hesitant to follow through on that promise.
Similarly, the F.C.C. drew rebukes for its approval last year of the merger between Comcast and NBC Universal, which critics claimed would concentrate too much power over both television content and its transmission to consumers.
The move this week to conduct a hearing on the cellphone deal was the first time the F.C.C. had done so on a merger since the 2002 proposed alliance between Echostar and Direct TV, which ultimately was scrapped.
In this case, however, ATT has noted that expansion of the nation’s Internet infrastructure is one of Mr. Obama’s top goals to help rebuild the economy, and the F.C.C. itself has predicted that its recent initiative to expand broadband Internet access to rural areas would create hundreds of thousands of jobs.
Consumer groups, which generally have opposed the merger, said this week’s combined actions indicated that the deal was falling apart.
“The chances that ATT will take over T-Mobile are almost gone,” Gigi B. Sohn, president of the consumer group Public Knowledge, said in a statement. “While you can never count out ATT entirely, the fact that they pulled their F.C.C. application speaks volumes about the company’s lack of confidence” in getting approval.
Deutsche Telekom, based in Germany, said in a statement that the withdrawal “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. As soon as practical, Deutsche Telekom and ATT intend to seek necessary F.C.C. approval.”
ATT issued its own statement saying that the companies were taking this step “to facilitate the consideration of all options at the F.C.C.,” as well as to consider other options.
Edward Wyatt reported from Washington and Jenna Wortham from New York.
Article source: http://www.nytimes.com/2011/11/25/technology/att-deal-with-t-mobile-takes-a-step-back.html?partner=rss&emc=rss