AT&T Inc. said today that after a thorough review of options it has agreed with Deutsche Telekom AG to end its bid to acquire T-Mobile USA, which began in March of this year.
The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled.
“AT&T will continue to be aggressive in leading the mobile Internet revolution,” said Randall Stephenson, AT&T chairman and CEO, in the press release. “Over the past four years we have invested more in our networks than any other U.S. company. As a result, today we deliver best-in-class mobile broadband speeds – connecting smartphones, tablets and emerging devices at a record pace – and we are well under way with our nationwide 4G LTE deployment.
“To meet the needs of our customers, we will continue to invest,” Stephenson said. “However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs.
“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” Stephenson said.
To reflect the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom.
Source: AT&T Inc.
Anton Troianovski reports for The Wall Street Journal, “Mr. Stephens said the real hit wouldn’t be that bad, because Uncle Sam will effectively pick up part of the tab. ‘I certainly expect that will be fully tax deductible,’ Mr. Stephens said, according to a transcript. ‘You guys can do the math on that, but essentially it is a much smaller cash impact than the first impressions may give you.'”
“Analysts at UBS AG did the math,” Troianovski reports. “Their take: The cash hit of the breakup fee after taxes would be $1.5 billion to $1.8 billion — as little as half of AT&T’s cash payment to Deutsche Telekom.”
Read more in the full article here.
MacDailyNews Take: In other words, AT&T will wait to see what things look like eleven months from now.
[Thanks to MacDailyNews Reader “Ben E.,” “GetMeOnTop,” “Robert S.,” and “Lynn Weiler” for the heads up.]
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