Carriers

AT&T withdraws FCC application to acquire T-Mobile, takes new tactic to get government approval

November 24, 2011 | by Andrew Kameka

AT&T, T-Mobile

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T-Mobile fans upset about AT&T’s proposed acquisition of the magenta network have another reason to be thankful now that the deal has hit a major roadblock. Following the FCC indicating that it would seek a review of the application in courts, AT&T has withdrawn its application without prejudice.

That does not mean AT&T’s planned acquisition of T-Mobile USA is over.

AT&T and T-Mobile’s German parent company Deutsche Telekom are still pursuing the deal through the pending case with the DOJ or “alternate means.” The withdrawal of the application is not the companies surrendering; it’s more like the two carriers retreating so they can regroup and attack this issue through other channels. AT&T and Deutsche Telekom will seek FCC approval of the deal “as soon as practical” according to a statement released today.

While this is not the end of AT&T-Mobile, this is the latest, and perhaps biggest, sign that the deal is more likely to fall through. AT&T is already preparing for the possibility of paying Deutsche Telekom $4 billion, a penalty the two sides agreed to should the government not approve the deal.

Resistance to the deal was expected, but AT&T must have believed that its chances were strong to acquire T-Mobile. However, with the DOJ seeking to block the acquisition and the FCC saying the deal would lead to thousands of lost jobs and fewer choices for consumers, there’s cause for concern.

For Deutsche Telekom, getting approval is crucial because the company continues to lose money and customers because of T-Mobile’s poor financial performance. Reuters reports that “there is no ‘Plan B’” for DT, so it will fight to get this deal approved. There’s no telling what will happen to T-Mobile USA if AT&T fails to get government approval for its acquisition plans. The fourth-ranked carrier continues to lose customers each quarter and has struggled to show any signs of growth in recent years.