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AT&T Stops T-Mobile Merger Bid With the FCC
An anonymous reader writes Relationships are tough and it looks like AT&T and T-Mobile's has stopped before it even started. From the article: 'AT&T and T-Mobile have announced that they will remove their pending applications to the FCC for their merger bid. This comes after statements from the FCC chairman 'strongly opposing the merger'. In doing so, AT&T has agreed to pay T-Mobile 4 Billion US dollars to cover accounting and other costs that this may have caused. While AT&T would still like to merge, it is unlikely that they will gain antitrust clearance from the Department of Justice. It's the antitrust aspect that this is mostly about, in that AT&T has said that they want this move to free up the FCC to consider all options, and focus both AT&T and T-Mobile on the pending antitrust.'"
they have the worst phones of any major US carrier.
T-Mobile has the mytouch 4g slide, which is currently the only qwerty phone with a dual core cpu ... i certainly would prefer that over my single core Epic...
The New York Times had an even more informative article on this with the most likely reason -- if they continue with the FCC application, most of the records they filed for it become public, which the DOJ can then turn around and use against them in the antitrust suit. Quite likely, the horrific reality of all of AT&T's patently-false claims that were debunked months ago are spelled out in those filings and they don't want it getting out.
The attempt to withdraw the FCC application is essentially an admission that they know the deal has less than zero chance. Another interesting point in the NYT is that the FCC is under no obligation to honor their request. They can deny it and force it to judicial review, or grant the withdrawal with prejudice (meaning AT&T cannot refile the application later, which would absolutely kill the deal).
I don't think the issue is how big were their costs but why they paid $4B. The article makes it sound like they just felt bad for the company and decided to give them the $4B. But obviously it is some under the table payment for something rather substantial as $4B is like the yearly revenue of a giant multinational company.
It is not something that a company can just afford to give away or even write into a contract as a "if things don't work out" clause.
Merger deals almost always include a play-or-pay clause because all the discovery, legal work, etc has real costs to the target company... it prevents non-serious bidders or those who would bid to shake confidence in the company then back out. It also covers stuff like customer/employee impact (people leaving in anticipation of the merger) and any proprietary information the acquirer might have picked up during the due diligence process.
Natural != (nontoxic || beneficial)
Just FYI: Deutsche Telekom has outright told workers at T-Mobile that if the deal with AT&T fell through that they would seek another buyer to sell T-Mobile to. The impression is that they want to get out of the US market, but remain in the European market.