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Posted at 12:13 PM ET, 11/28/2011

AT&T CEO’s surprise call from FCC chairman


AT&T President and CEO Randall Stephenson, left, and T-Mobile USA President and CEO Philipp Humm during a Senate Judiciary Committee hearing in May. (Alex Wong/Getty Images)
A couple days before Thanksgiving, AT&T CEO Randall Stephenson received probably one of the worst phone calls of his career.

With no warning, the chairman of the Federal Communications Commission called last Tuesday to say he was moving to oppose AT&T’s bid for T-Mobile by handing the merger application to an administrative judge, according to an ex parte filing at the FCC. Chairman Julius Genachowski made a similar call that day to Rene Obermann, chief executive of T-Mobile parent Deutsche Telekom.

Hours later, the agency revealed their plan to the media. AT&T’s stock dropped about 3.4 percent over the next day.

“During the call, Chairman (Julius) Genachowski indicated that he would be circulating to his fellow Commissioners a draft order approving the Qualcomm transaction and a draft order designating the T-Mobile transaction for an administrative hearing,” according to the filing by AT&T last Friday at the FCC. “Chairman Genachowski indicated that the draft designation order would likely be voted in the next several days or weeks but the administrative hearing would be deferred until after resolution of the pending litigation with the Department of Justice.”

The filing illustrates the swift move by regulators last week in unraveling the wireless industry’s record megamerger.

The call came one day after Justice Department officials canceled a meeting with AT&T, according to a person with knowledge of the plans. The company, hoping to reach a settlement with Justice if it doesn’t win its legal defense of its merger in court, is fighting to preserve its $39 billion deal in any way it can.

On Wednesday, all eyes will turn back to the companies’ battle against Justice. Judge Ellen Huvelle of the U.S. District Court of the District of Columbia will hold a “status conference” with both parties. At that meeting, she may inquire about the FCC’s move and how that affects the case before her.

By  |  12:13 PM ET, 11/28/2011

 
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