Well, this isn’t the strategy I was expecting, but it seems the FCC’s request to investigate the AT&T/T-Mobile deal under the lens of an administrative law judge last week just doesnt sit well with AT&T. Rather than be scrutinized, the company has instead withdrawn its application for the merger. But don’t let that confuse you. Buying Deutsche Telekom AG’s T-Mobile is still the big blue carrier’s end goal — the FCC just happens to be blocking the road at the moment.
What may be more interesting is that AT&T’s confidence seems to be dwindling. According to an official release, the company agreed to pay a $4 billion pre-tax charge on its fourth quarter balance sheet, which is the exact amount it would owe to affected parties should the deal fall through. $3 billion in cash would go to Deutsche Telekom as a default payment, while another $1 billion would go to the book value of spectrum that big blue would be forced to relinquish.
In other words, AT&T is preparing for the worst in a very real way. Well, the worst for them, not necessarily the worst case scenario for everyone.
What I find most interesting is that AT&T decided to release this information on Thanksgiving. Maybe they assumed we media types would be stuffing our faces with stuffing (ha!). Either way, AT&T is still putting on a brave face, officially stating the following:
AT&T Inc. and Deutsche Telekom AG are continuing to pursue the sale of Deutsche Telekom’s U.S. wireless assets to AT&T and are taking this step to facilitate the consideration of all options at the FCC and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice either through the litigation pending before the United States District Court for the District of Columbia, Case No. 1:11-cv-01560 (ESH) or alternate means. As soon as practical, AT&T Inc. and Deutsche Telekom AG intend to seek the necessary FCC approval.
The question now is, will a deal between AT&T and T-Mobile ever really be “practical”?