Most Read: Business

DJIA
-0.92%
S&P 500
-0.73%
NASDAQ
-0.83%
 Last Update: 08:12 PM 10/22/2014

World Markets from      

 

Other Market Data from      

 

Key Rates from      

 

Blog Contributors

Timothy B. Lee

Timothy B. Lee

Timothy B. Lee covers technology policy, including copyright and patent law, telecom regulation, privacy, and free speech. He also writes about the economics of technology. He has previously written for Ars Technica and Forbes. You can follow him on Twitter or send him email.

Brian Fung

Brian Fung

Brian Fung covers technology for The Washington Post, focusing on electronic privacy, national security, digital politics and the Internet that binds it all together. He was previously the technology correspondent for National Journal and an associate editor at the Atlantic. His writing has also appeared in Foreign Policy, Talking Points Memo, the American Prospect and Nonprofit Quarterly. Follow Brian on Google+ .

Andrea Peterson

Andrea Peterson

Andrea Peterson covers technology policy for The Washington Post, with an emphasis on cybersecurity, consumer privacy, transparency, surveillance and open government. She also delves into the societal impacts of technology access and how innovation is intertwined with cultural development.

Post Tech
About / Where's Post I.T.?   |    Twitter  |   On Facebook  |  RSS RSS Feed  |  E-Mail Cecilia
Posted at 08:14 AM ET, 11/28/2011

What’s next for AT&T and T-Mobile merger?


(Seth Perlman/Roberto Pfeil - AP)
What’s next for AT&T and T-Mobile? Not a merger in the near future.

The wireless giants say they are fighting to salvage their $39 billion deal. But some analysts say the firms look unlikely to win their mounting regulatory battles against the Justice Department and now the Federal Communications Commission.

By withdrawing their merger application at the FCC, the companies hoped to focus on their legal defense against Justice’s suit to block the deal. As reported, last week the chairman of the FCC signaled he opposed the deal and would send the proposal to an administrative judge.

“We believe the DOJ will likely win in court, and the FCC arguments provide it with further ammo,” said Christopher King, a principal at Stifel Nicolaus. “We also believe the initial FCC resistance provides DOJ with added leverage to keep fighting if it loses the first round of litigation, or to negotiate a settlement, if necessary.”

Recognizing the challenges ahead, AT&T said it would take a $4 billion charge in the fourth quarter of this year, signaling it would breach its promise to close the deal by September 2012.

AT&T has said it will reapply for the merger at the FCC. And Bloomberg reported last week that AT&T is preparing a settlement offer to divest 40 percent of T-Mobile’s assets.

But don’t expect a wireless mega-merger next year or in the foreseeable future, analysts say.

“The fat lady hasn’t sung yet,” said Craig Moffett, an investment analyst for Sanford C. Bernstein. “But she has taken the stage. And the band has begun to play.”

Few companies understand the regulatory grind involved in getting a merger approved like AT&T. The firm is looking for a long-term victory with its bid for T-Mobile, experts say.

Some public interest groups and analysts say that by withdrawing their application, the companies keep confidential FCC documents out of the hands of DOJ attorneys working to block the deal.

But AT&T has denied the speculation and said that if the FCC rejects its request to scrap its merger application, it would sue the agency.

“We have every right to withdraw our merger from the FCC, and the FCC has no right to stop us,” AT&T general counsel Wayne Watts said last Friday in a statement.

And what of T-Mobile, the nation's fourth-largest carrier, as it sees its suitor dig in its heels deeper to win the merger? Parent company Deutsche Telekom has indicated it wants to find a buyer for T-Mobile to exit its U.S. operations.

Expect cable and satellite Internet service providers to eye T-Mobile as a way to enter the lucrative wireless business their customers seek.

“In the short term, we expect T-Mobile to be a disruptive pre-paid operator. Longer term, we speculated that a deal with the cable operators is T-Mobile’s best available option,” Moffett said.

By  |  08:14 AM ET, 11/28/2011

 
Read what others are saying
     

    © 2011 The Washington Post Company