Thursday, November 24, 2011

AT&T prepping to pay $4 billion to T-Mobile


When AT&T announced their intent to buy T-Mobile in March of this year, we freaked out. The United States needs more competition in the wireless space, not less. Everyone started complaining about the deal, with Sprint being incredibly vocal about the consequences of the government approving the deal. Earlier this week FCC Chairman Julius Genachowski said he doesn’t think the merger will be of any benefit to the American people. He wants to give both companies an opportunity to tell the FCC why they think he’s wrong however, though the meeting he’s proposed still has to be approved by other members of the FCC staff before it can take place. Here’s where things get interesting: AT&T has just announced that they’ve withdrawn their application for the planned T-Mobile merger from the FCC. More importantly, in May it was discovered that if AT&T failed to get the OK from the government to gobble up T-Mobile, they’d have to give them up to $3 billion in cash, $2 billion worth of spectrum, and a guaranteed roaming agreement worth around $1 billion.
And guess what AT&T just did? They’ve recognized a pretax accounting charge for $4 billion ($3 billion cash and $1 billion for spectrum) on their Q4 2011 accounting sheet. While that isn’t exactly confirmation that the deal is dead, both companies are still hoping they can work something out, it’s pretty safe to say that the deal as we thought it would go down back in March is not going to happen. What T-Mobile plans to do with that money is also up for debate because Deutsche Telekom was really looking forward to pocketing $39 billion from AT&T and then pouring it into their aging European networks. Guess they might have to change their mind.
If you’re a T-Mobile customer, you should be really happy right now. Again, the deal isn’t officially dead, but it’s damn near close. And if you’re on AT&T … look forward to seeing your bill get a tiny bit more expensive so that AT&T can recoup their losses.

No comments: