AT&T Inc. and Deutsche Telekom AG, the parent of T-Mobile, have withdrawn their applications with the Federal Communications Commission (FCC) after the agency's chairman moved to thwart AT&T's acquisition of T-Mobile USA.The two telecommunications giants said they were still committed to the merger and were only withdrawing the applications to focus their efforts on winning approval from the Department of Justice (DOJ), which has filed a lawsuit against the takeover.AT&T, however, said that it would record a charge of $4 billion this quarter to provide for the break-up fees it would have to pay Deutsche Telekom if the transaction does not go through.Objection to the deal:- Julius Genachowski, chairman of the FCC, had circulated a draft order on Tuesday among other commissioners asking for an administrative hearing on the acquisition, the first step towards blocking the deal.The move came after FCC officials concluded the acquisition of T-Mobile will shrink competition among wireless carriers, lead to higher prices, less investment, massive job losses and hurt consumer interest.
The deal, viewed as essentially dead by many, would have propelled AT&T to the top spot in terms of market share in the United States.The DOJ also says that the merger will restrict competition, and has filed a civil antitrust lawsuit at the federal court in Washington to block it. The trial is set to begin in February.The companies are thought to have made the move to withdraw the applications to prevent the FCC from publicly revealing records of the potential effects of the merger, which could then be used by the DOJ in its suit.AT&T has claimed its $39 billion takeover of T-Mobile would help create jobs, while FCC officials say the company's confidential filings indicate it would end up cutting jobs.Death of the deal:- FCC spokeswoman Tammy Sun confirmed that the agency had received the request for withdrawal and will consider it. However, the agency is under no obligation to grant it.If it chooses not to, the agency can go ahead to the administrative hearing, which analysts say could take more than a year.
Even if FCC grants the withdrawal, it may choose to do so with prejudice, meaning AT&T and T-Mobile will be barred from bringing the deal back to the agency for consideration, effectively killing it.The deal, viewed as essentially dead by many, would have propelled AT&T to the top spot in terms of market share in the United States. Julius Genachowski had circulated a draft order on Tuesday among other commissioners asking for an administrative hearing on the acquisition, the first step towards blocking the deal.The New York Times quoted Craig Moffett, an analyst at Sanford C. Bernstein, as saying that the withdrawal of the F.C.C. application "is a tacit acknowledgment by AT&T that this story is all but over."The fat lady hasn't started singing yet, but she's holding the mike, and the band is about to play."