In a surprising move AT&T and T-Mobile owner Deutsche Telekom are bracing for a deal collapse. Both the FCC and Department of Justice oppose the buyout, and AT&T is taking some precautionary actions just in case the deal doesn’t go through. The fact that AT&T and Deutsche Telekom waiting until the night before Thanksgiving to release the news is a sign that they were hoping this news wouldn’t be seen by many people.
The biggest indicator of AT&T’s doubts is the fact that it is taking a charge of $4 billion, three of which is earmarked for Deutsche Telekom and the fourth is for spectrum promised to Deutsche Telekom if the deal was to fall through. If the deal falls through AT&T would owe Deutsche Telekom $6 billion total and spectrum, so it seems as though AT&T is trying to spread out quarterly losses over a couple of quarters. If AT&T wants to cut its losses and pull out on the deal it can first do so on March 20, but if it decides to keep trying to make the deal it has a deadline of September 20 to make it go through. With how many hurdles left to jump to make the deal go through the September 20 deadline is coming up quickly.
AT&T is also changing its focus from winning over the FCC to the Department of Justice. Both agencies oppose the take over, but AT&T is going to focus on the pending DOJ court case. If AT&T wins the court case filed by the DOJ it will then refocus on convincing the FCC that the deal is in the best interest of U.S. consumers.
Both the FCC and the DOJ are mostly concerned about the reduction of competition the merger would cause moving from four national carriers to three. Despite AT&T claiming the merger would create jobs, the FCC and DOJ so far are not convinced. There are several other changes that will effect customers of both companies if the deal goes through. This is a long way from being resolved, but the action taken by AT&T today is the first time the company has shown that it has doubts about the buyout.
I truly hope this deal will fall apart. A duopoly of ATT and Verizon is bad news for consumers, employees and innovation. Unfortunately ATT has paid off unions to tell their people to support this deal. It really makes you crinch when you hear of the union bosses telling their people to support this deal for it will create jobs. Will the sheeple please wake up!
“Despite AT&T claiming the merger would create jobs, the FCC and DOJ so far are not convinced.” This is so laughable. An M&A creates jobs? Almost all M&As have resulted in job losses. In fact, AT&T’s own history of M&A of Bell South (original deal = SBC bought Bell South) and old Ma Bell (when SBC bought AT&T) resulted in major job losses. I’m glad the DOJ and FCC are not convinced by the fairy tales.
When are American consumers going to get smart and learn that the AT&T acquisition of T-Mobile is BAD news. It shrinks the GSM market down to 1 major player. You’re basically screwed if you want a nation-wide carrier and need GSM for you will no longer have a choice.
Such a pity AT&T is going to lose an opportunity to squeeze captive consumers even more than they already do. Let me go punch myself in my nose so i can force out a tear for them. The scary thing is with politics being what they are in the US, they might have a shot of swaying the DOJ if they dump enough money on them.