ATandT to Take $4 Billion Hit Over T-Mobile Merger
As AT&T's proposed acquisition of T-Mobile flounders, the company prepares to shell out $4 billion to Deutsche Telekom.Network operator AT&T said it expects to recognize a pretax accounting charge of $4 billion ($3 billion cash and $1 billion book value of spectrum) in the fourth quarter of 2011 to reflect the potential breakup fees due to Deutsche Telekom in the event the proposed acquisition of the company's American arm, T-Mobile USA, does not receive regulatory approval from the Federal Communications Commission. A decision by the full commission is expected in the coming weeks. Following the announcement by the FCC on Nov. 22 that it is circulating a proposed order that would designate the sale of T-Mobile USA to AT&T for hearing, both Deutsche Telekom and AT&T withdrew the pending applications regarding the sale of T-Mobile USA. Both companies said they are continuing to pursue the sale of T-Mobile USA to AT&T.
"The FCC's action today is disappointing. It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the U.S. economy desperately needs both," said Larry Solomon, AT&T's senior vice president of corporate communications. "At this time, we are reviewing all options."