On Thanksgiving Day when the financial markets were closed, and most Americans were taking the day off, AT&T announced it withdrew its FCC application to buy T-Mobile.
The AT&T announcement is in response to the actions of the Federal Communications Commission earlier in the week. FCC Chairman Julius Genachowski’s said that he would seek an administrative hearing to review the AT&T takeover of T-Mobile. The actions are seen as a sign of opposition to the deal with battlelines being drawn.
Internet war of words
The Communications Workers of America, the large labor union in the United States that supports the merger, continues to use various websites to sway public opinion on the merger.
A statement made earlier this week on Communications Workers of America website EyeOnSprint.org had the headline, “FCC Makes Wrong Decision on AT&T/T-Mobile Merger”
AT&T waging battles on many fronts
On one hand AT&T announced it had not given up on completing the $39 billion deal to acquire T-Mobile. On the other hand AT&T said it will set aside $4 billion toward the fee it agreed to pay T-Mobile’s parent company Deutsche Telekom if the deal failed to go through. According to the terms of the proposed deal, Deutsche Telekom gets a break up fee of $3 billion in cash and $1 billion in spectrum assets if AT&T can not complete the takeover.
One explanation that AT&T offered in withdrawing the FCC application for T-Mobile merger is that it wanted to first focus on The Department of Justice antitrust lawsuit to block the merger that goes to trial in February. If AT&T loses the battle with The Department of Justice in February, an FCC hearing later in the year is meaningless.
Who are the real winners in the merger?
Does preventing mergers because companies might do something wrong makes sense? What about preventing mergers simply because the company will be too big?
If that were the case what about the Comcast and NBC-Universal merger? Does allowing one of the largest telecommunications providers to acquire control over numerous American television networks, numerous cable channels, as well as motion picture companies, several television production companies fall under the same logic?
For the average consumer, getting caught in the crossfire of claims and promises can be confusing. It looks like this week’s actions are the beginning of a long battle ahead between AT&T and the goverment.
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