In a press release this morning, AT&T has formally withdrawn the letter of intent to merge filed in May of this year to begin the purchase process necessary to acquire T-Mobile USA’s operating licenses, following months of resistance from the federal regulator.
This follows Tuesday’s comments made by FCC Chairman Julius Genachowski stating that the proposed purchase and merger is not in the public interest and that the FCC is against the deal, citing loss of marketplace competition and employment, a point of public contention in recent months.
Instead, the carrier will focus on the ongoing antitrust suit filed by the Department of Justice shortly after the initial announcement that seeks to actively block and prevent the merger from being completed. Both AT&T and T-Mobile issued the following statement:
“AT&T and Deutsche Telekom are continuing to pursue the sale of Deutsche Telekom’s U.S. wireless assets to AT&T and are taking this step to facilitate the consideration of all options at the FCC and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice, either through the litigation pending before the United States District Court for the District of Columbia, or alternate means.”
AT&T has also confirmed that it will absorb costs totaling $4 billion related to the merger for the 4th quarter of this year, which will significantly impact future earnings reports. As previously reported, should the merger be rejected by regulator, AT&T will also be forced to give up $6 billion in cash and expenses related to the merger to T-Mobile USA as well as all assets that were to be originally acquired.
AT&T has pledged to resubmit the letter of intent in the future, with no timetable given on when it would do so. Should it resubmit the letter to the FCC, it’s expected that the carrier will have to make more extensive concessions than the ones currently found in the FCC letter submitted in May.
