AT&T is giving up on side deals it hoped would win it T-Mobile
AT&T's aggressive bid for T-Mobile seems to be winding down, as a new report says even AT&T's side deals with Leap Wireless and MetroPCS have gone cold.
Any side deals that AT&T was working on, in a last-ditch effort to gain federal approval of its $39 billion bid to buy T-Mobile, are now kaput, the Wall Street Journal reported this morning, citing people familiar with the matter.
A criticism of the AT&T purchase is that it would give a single carrier too much control of the nation's spectrum, devastating the ability of smaller players to compete. AT&T was reported to be in talks with Leap Wireless about a deal that would divest potentially up to 30% of T-Mobile's assets to the smaller carrier, giving AT&T a less objectionably large portion of the whole (CP: AT&T and Leap Wireless secretly planning side deal, says report).
The Journal adds that other potential buyers for the spectrum included MetroPCS and satellite-TV provider Dish Network, and that talks with Leap faltered "amid concern that even with such sales, the deal was unlikely to win over the Justice Department..."
AT&T pulled its applications with the FCC Thanksgiving morning, saying it needed to regroup its efforts. The FCC, despite the retraction, released a report on its findings, following months of reviewing submitted documents and holding hearings on the requested merger. AT&T followed with a public response, expressing what it said was great disappointment and not having been given fair consideration. In August, it also expressed surprise when the U.S. Justice Dept. filed a class-action suit to stop the deal (CP: DOJ suit against AT&T, T-Mobile deal joined by 7 states), after what AT&T said had until then been an amicable process.
AT&T had requested that the DOJ suit be fast-tracked, but earlier this month a U.S. district judge questioned why the trial should take place, using up time and taxpayers' money, when an FCC application wasn't in the works (Unfiltered: AT&T, says judge, needs to prove it's not taking everyone for a ride).
According to today's Journal report, AT&T is now considering whether to drop the deal with T-Mobile completely, and potentially whether to "renegotiate the large fee" of approximately $4 billion that it promised to T-Mobile parent company Deutsche Telekom, should the deal not go through.
Though in its Thanksgiving statement, AT&T said it "expects to recognize a pretax accounting charge of $4 billion ... in the 4th quarter of 2011 to reflect the potential break up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval."
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