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AT&T withdrawing merger application with the FCC while pursuing win with the Justice Department

Mel Martin

AT&T apparently believes its idea to merge with T-Mobile is headed for trouble, and today the telecommunication giant announced it has withdrawn its joint application for FCC approval ahead of what was going to be a US
$39 billion dollar deal. The two companies say they are going to focus efforts on getting approval from the Justice Department for the merger, but that seems a stretch since last August the Department of Justice sued AT&T claiming the merger was anti-competitive and in violation of antitrust laws.

AT&T said it plans to book a $4 billion dollar charge in the 4th quarter in preparation for the deal failing and it having to make a large payment of up to $6 billion dollars to T-Mobile which was guaranteed to the German owned company as a break-up fee.

It's likely that AT&T auditors are wanting AT&T to take the financial hit now, and the action that AT&T announced today is a sign the company has low confidence it can convince the FCC or the Justice Department that the deal is good for consumers. AT&T claimed the merger would create many new US jobs, while the US government claims the merger would result in a massive job loss and higher prices for cellular service.

AT&T was the first company to offer the Apple Phone. T-Mobile is now the only US carrier that does not sell it. Earlier this year both Verizon and Sprint have been able to offer the popular smartphone.