AT&T will to seek antitrust clearance with T-Mobile USA

Following the announcement by the Federal Communications Commission (FCC) on November 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. "The FCC's action today is disappointing. The step is being undertaken by both companies to consolidate their strength and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice, Deutsche Telekom announced.

As soon as practical, Deutsche Telekom and AT&T intend to seek the necessary FCC approval. AT&T Inc. said Thursday it would take a $4 billion charge in this year's final quarter, an acknowledgment the company's proposed $39 billion acquisition of Deutsche Telekom AG's T-Mobile USA faces an increasingly uphill battle. The charge represents $3 billion in cash and $1 billion in spectrum, as AT&T promised Deutsche Telekom in case the deal was unable to secure regulatory approval. The two companies said that on Wednesday they removed their merger application with the Federal Communications Commission. In Frankfurt Thursday, Deutsche Telekom said it will continue to pursue the sale.

"As soon as is practical, Deutsche Telekom and AT&T intend to seek the necessary FCC approval," it said.--AT&T said the companies would concentrate their efforts on obtaining antitrust clearance from the Department of Justice, either through a federal suit brought by the government agency or "alternate means."--Approval is needed from both the FCC and Justice Department. On Tuesday, FCC Chairman Julius Genachowski said he would seek a hearing on the AT&T deal, an indication the agency doesn't support the merger. T-Mobile representatives were unavailable for comment.

Obstacles to the merger are mounting. FCC officials on Tuesday said they believed the combination of AT&T and T-Mobile would significantly diminish competition in the U.S. wireless market. AT&T will continue to seek antitrust clearance for its merger with rival T-Mobile USA, it said Thursday. However, to reflect the break-up fee it will have to pay T-Mobile's owner Deutsche Telekom if the deal does not get regulatory approval, AT&T expects to recognize a US$4 billion [b] accounting charge in the fourth quarter.

Withdrawing the applications to the FCC now will "facilitate the consideration of all options at the FCC," AT&T said, adding that the companies intended to seek FCC approval for the deal "as soon as practical."--That setback aside, AT&T and Deutsche Telekom haven't given up on the deal eventually getting regulatory approval. AT&T plans to recognize a pre-tax charge in the fourth quarter to reflect "the potential break up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval," T-M