AT&T has indicated for the first time that its proposed merger with T-Mobile USA may not go ahead.
Dallas, Texas-based AT&T and T-Mobile parent Deutsche Telekom have announced the withdrawal of their merger application from the Federal Communications Commission (FCC), following an announcement this week by FCC Chairman Julius Genachowski that he was moving to block the deal.
Such a move would create a major obstacle to the merger in the near term.
AT&T said that it was planning to set aside $4 billion in this year’s final quarter to “reflect the potential break up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval.”
Fees would be due to Deutsche Telekom in the event that the deal fails to complete by September 2012.
However, the two companies said that they will continue to fight for approval on the merger in other ways andthat as soon as practical, they intend to seek the necessary FCC approval for the deal.
AT&T and Deutsche Telekom entered into the original merger agreement in March this year, under which AT&T agreed to acquire the T-Mobile subsidiary of Deutsche Telekom in exchange for approximately $39 billion.
AT&T says that some of the benefits of the proposed merger include improved service, increased LTE coverage, increased infrastructure investment and job creation. It says that the merger would increase AT&T's infrastructure investment by more than $8 billion over seven years, driving economic growth.
AT&T employs 266,590 people and has 96 million wireless subscribers. Headquartered in Bellevue, Washington, T-Mobile USA employs 37,795 people and has 34 million wireless subscribers.
