AT&T-Mobile One Step Closer to Failing
posted Saturday Dec 10, 2011 by Scott Ertz
This week, the plot has thickened on the proposed AT&T/T-Mobile merger. So far, the Department of Justice has filed suit to block the merger, and the FCC said they would vote to prevent it after receiving a document revealing their reasoning for the merger. AT&T's response to the FCC was to pull the FCC application, citing a focus on the DoJ case. This has not worked out as expected.
Because of the withdrawal, the DoJ has said they will file to postpone proceedings. Their reasoning? A lack of an application to the FCC. Since both agencies have to sign off on the merger, they feel there is no need to rush the proceedings if AT&T is currently not seeking approval from the FCC. The comments came about during hearings to determine whether or not U.S. District Court Judge Ellen S. Huvelle will reconsider a speedy trial. Both AT&T and T-Mobile USA have said that a speedy trial is essential or the merger will certainly fail.
Legal teams from both companies have said that the FCC request was pulled to allow them to focus on a single application, while the DoJ says that removing their application to the FCC shows a lack of faith that the merger is viable. AT&T needs the speedy trial because there is a $4 billion timer ticking down to September of 2012, while T-Mobile needs a speedy trial because, at present, they are losing investor, customer and partner confidence.
If the trial is delayed, Deutsche Telekom, T-Mobile USA's parent company, will be forced to consider canceling the merger, which means losing out on that $4 billion cancellation penalty against AT&T. In a time of financial difficulty, that could really hurt them, but it is possible that another 7 months of waiting for an answer could hurt them more.