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AT&T pulls T-Mobile application to avoid FCC hearing

Mon, 11/28/2011 - 2:15pm
Maisie Ramsay, Wireless Week

AT&T is threatening to sue the FCC if it moves forward with a plan to hold a hearing on the troubled T-Mobile USA deal after the operator withdrew its application for the $39 billion merger.

AT&T withdrew its FCC application to acquire T-Mobile's spectrum licenses on Nov. 23, one day after Chairman Julius Genachowski said the agency was unable to approve the transaction and would circulate a draft order to send it to an administrative hearing, a major setback for the deal.

AT&T says it pulled the merger before the FCC voted on the order, preventing the agency from moving forward with its plans for a hearing.

"We have every right to withdraw our merger from the FCC, and the FCC has no right to stop us," AT&T senior executive vice president and general counsel Wayne Watts said in a Nov. 25 post on the company's official blog. "Any suggestion the agency might do otherwise would be an abuse of procedure, which we would immediately challenge in court."

The FCC could not be immediately reached for comment. Its proposed hearing would not begin until the conclusion of the Justice Department's antitrust lawsuit against the deal. The DOJ's trial is set to begin in February.

AT&T and T-Mobile parent company Deutsche Telekom said in a joint statement that the decision to pull the FCC applications would allow them to focus on the DOJ complaint.

"AT&T and Deutsche Telekom are continuing to pursue the sale of Deutsche Telekom's U.S. wireless assets to AT&T and are taking this step to facilitate the consideration of all options at the FCC and to focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice, either through the litigation pending before the United States District Court for the District of Columbia … or alternate means," the companies said. "As soon as practical, AT&T and Deutsche Telekom intend to seek the necessary FCC approval."

AT&T will take a $4 billion charge this quarter to reflect the potential multi-billion break-up fee owed to Deutsche Telekom if the deal falls through.

Bloomberg reported last week that AT&T may sell off a "significantly larger portion of assets than it had initially expected" to get the DOJ to approve its merger with T-Mobile.

The report, which cited an unnamed source familiar with the plan, said the divestitures could comprise as much as 40 percent of T-Mobile's assets.

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