AT&T, T-Mobile Merger in Jeopardy, FCC Application Withdrawn

AT&T sets $4 billion aside in case the deal collapses

AT&T and T-Mobile took a major step backward in their attempt to merge, announcing Thursday that they have withdrawn their application to the Federal Communications Commission for approval of the $39 billion deal.

The move comes after FCC Chairman Julius Genachowski indicated on Tuesday that he did not approve of the deal, informing other commissioners that the matter should be sent to an administrative hearing. That is the first step towards blocking the proposal.

The agency typically makes such referrals in cases where it cannot find a public benefit to a deal, or if it has a lot of questions about it.

The companies said they would focus on getting approval from the Justice Department through trial or settlement. The DOJ's anti-trust case against the T-Mobile deal will be heard in February.

AT&T issued a statement that they “are taking this step to facilitate the consideration of all options at the FCC.”

Also Read: AT&T's $39B T-Mobile Buy Hits Setback — FCC Wants Judge to Look at Deal

Deustche Telekom said it was an effort by “both companies to consolidate their strength.”

However, AT&T has also said it will take a $4 billion charge to its balance sheet to reflect the potential fee it would owe Deutsche Telekom should the deal fall through.

The merger would make AT&T the largest mobile provider in the United States, but it has been plagued by anti-trust concerns from the get-go. Eliminating T-Mobile from the market would leave just three significant national service providers – AT&T, Verizon and Sprint. Of the three, Sprint would easily be the smallest. 

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