NEWS ANALYSIS: AT&T's $39 billion buyout of T-Mobile USA appears dead even as it desperately casts about for some way to restructure the deal to win government approval.
AT&T has until Jan. 12 to decide whether it wants to proceed with its plans to buy T-Mobile USA by finding some way to restructure the deal so it can pass antitrust and regulatory review.
The clock is ticking for AT&T after U.S. District Court Judge Ellen Huvelle agreed Dec. 12 with a request by the U.S. Department of Justice and AT&T to cancel the Feb. 13 start date for the trial of the government's antitrust suit seeking to permanently block the $39 billion buyout of T-Mobile USA.
A day later, Huvelle also agreed to postpone the antitrust suits filed against AT&T by rivals Sprint Nextel and C-Spire (formerly Cellular South).
Huvelle has given AT&T until Jan. 12 to inform the court of its plans for the merger. AT&T had said in its request that it needed more time to restructure the merger
so that it could meet regulatory approval.
Up until Dec. 12, AT&T had insisted that the trial move forward as quickly as possible to try to meet its own timetable for completing the buyout. Now the company needs to explain to the judge whether it plans to move forward at all.
This delay effectively kills the merger. AT&T has a deadline to complete the merger by the end of September 2012 or pay Deutsche Telekom, the owner of T-Mobile USA an estimated $4 billion in breakup fees and additional spectrum. AT&T apparently revised its position on the merger after it clearly angered Huvelle in a series of strategic moves that, among other things, resulted in the cancelling of its license transfer applications with the FCC.
"We don't have any confidence that we are spending all this time and effort and taxpayers' money and that we're not being spun," the jidge said during a Dec. 9 court session. Huvelle added that it appeared that the antitrust case before her was moot and that she could think of no reason to accommodate AT&T's request for an expedited hearing of the Department of Justice's antitrust suit seeking to permanently block the deal.
At this point, any sort of a merger deal will result in a delay that could be unsustainable by AT&T and T-Mobile. Eventually, the merger would have to contend with the FCC, which has taken a position clearly opposing the license transfer and published a report from the FCC's staff report strongly opposing
the transfer of necessary wireless spectrum licenses and AT&T's subsequent withdrawal of its application for those transfers
renders the merger deal and the antitrust case moot.
Cecilia Kang, writing in The Washington Post
, said that AT&T managed to offend the court by appearing to use a court decision in its favor to force the acceptance of the merger by the FCC and at the same time offend the FCC with a strongly worded statemen
t, followed by an even more strongly worded screed sent out the next day
as a response. It's worth reading the decidedly unfriendly comments to both these blog entries.
While Huvelle won't make a determination on how she intends to dispose of the AT&T merger until the Jan. 18 hearing, an extremely in-depth look at how AT&T blew its chances
published in The Washington Post
over the weekend makes it clear that this merger won't happen. AT&T, which is the top spender of lobbying dollars in the United States, went one step too far in its assumption that a company could lobby its way through the federal regulation process. It turns out that AT&T was wrong.