US TELECOM AT&T is likely to face an uphill regulatory struggle to buy T-Mobile USA.
Last week AT&T announced that it planned to buy Deutsche Telekom's T-Mobile USA business for £24 billion ($39 billion), which would make AT&T the largest mobile operator in the US. While AT&T announced its decision, the US Federal Communications Commission (FCC) still has to approve the deal after going over it with a fine toothed comb before it can go ahead.
One FCC official told the Wall Street Journal, "There's no way the [FCC] chairman's office rubber-stamps this transaction. It will be a steep climb to say the least." The official added that the FCC hasn't even begun to formally evaluate AT&T's proposal and will examine the deal to see if it is in the public interest.
Should the FCC approve the AT&T buyout, the purchase of T-Mobile USA would make AT&T the largest mobile operator in the US with 129 million subscribers. It would also become the only GSM network operator in the country.
Despite that, AT&T's spokesman Michael Balmoris said, "We are confident that the facts will demonstrate that the deal is in the public interest and that competition will continue to flourish." AT&T's executives are similarly confident that the deal will go through, although the company has set aside $3 billion to pay Deutsche Telekom if the deal is not approved.
AT&T could end up waiting over a year for the FCC and the US Justice Department to make their minds up on various aspects of the deal, however major deals have gone though before in spite of FCC officials having voiced such concerns.
With a $3 billion deal cancellation payout at stake, AT&T will agressively press the claim that its buyout of T-Mobile USA will not hinder competition. Mobile customers may, however, think differently. µ
Sign up for INQbot – a weekly roundup of the best from the INQ