AT&T Giving Up on T-Mobile USA Bid?

On November 23, 2011, AT&T and Deutsche Telekom withdrew their applications to combine spectrum owned by both companies, something that would be required if AT&T were to succeed in acquiring T-Mobile USA.

AT&T also says it will take a pretax accounting charge of $4 billion ($3 billion cash and $1 billion book value of spectrum) in the 4^th quarter of 2011 to reflect the potential break up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval.

AT&T says it still is pursuing the deal, but the taking of the charge and withdrawal of applications indicate, at the very least, that AT&T thinks prospects are dimming, if not a definitive recognition that the bid will fail.  AT&T Throwing in Towel on T-Mobile USA?


Given the fact that the accounting charge will be taken in advance of the time the Department of Justice antitrust hearing would occur, some will speculate that AT&T plans to withdraw its bid to buy T-Mobile USA before the hearing. 


It is starting to look as though AT&T is preparing to abandon its acquisition attempt. 

Judge allows Sprint suit against AT&T/T-Mobile deal

A U.S. judge has ruled that Sprint and C Spire Wireless can pursue part of their antitrust lawsuit against AT&T Inc's proposed $39 billion acquisition of T-Mobile USA. Though the judge dismissed large parts of the suit, U.S. District Judge Ellen Huvelle agreed to allow the competitors to pursue their injury claims about the effect the deal would have on the market for wireless devices.


AT&T and T-Mobile, a unit of Deutsche Telekom AG , had sought to dismiss the lawsuit, but U.S. District Judge Ellen Huvelle agreed to allow the competitors to pursue their injury claims about the effect the deal would have on the market for wireless devices.


The decision may complicate matters for AT&T and T-Mobile USA because they will now have to simultaneously fight the government's attempt to block the deal and argue against claims by the two competitors. Sprint suit against AT&T/T-Mobile deal


Though the outcome remains in doubt, some observers might argue that the fearsome, well-oiled AT&T regulatory affairs team has had an unexpectedly difficult time making the argument in favor of the acquisition. 


Some might argue that this indicates not some sudden loss of effectiveness on the part of AT&T's persuasion machine, but merely that the case is a tough one to present. 


Perhaps most difficult in that regard is the argument that there is a spectrum shortage that will be alleviated, in substantial ways, if the acquisition moves forward. Others have pointed out that it would cost less for AT&T simply to light up spectrum it already owns, for example. 


The other problem, from an antitrust perspective, is that market concentration in the U.S. mobile industry already exceeds the normal tests antitrust attorneys normally use to determine the extent of market concentration. HHI index