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FCC orders an extra review of AT&T's deal with T-Mobile USA

Public display of disapproval
Wed Nov 23 2011, 17:27

US TELECOMS GIANT AT&T is facing further investigation by the US Federal Communications Commission (FCC) of its proposed $39bn purchase of T-Mobile USA from Deutsche Telekom.

Earlier this year AT&T announced its plans to buy Deutsche Telekom's T-Mobile USA outfit for $39bn, claiming it would offer customers better service. Since then few have been convinced about the merger, which would leave some US consumers with no choice in wireless telecoms providers, and now the FCC has ordered an additional review of the acquisition.

AT&T and Deutsche Telekom had planned on closing the deal by 20 September 2012, however the FCC's extended review puts that date into question. There is always a chance that the two parties could extend the deadline, especially given that AT&T stands to lose somewhere in the region of $3bn if the deal falls through, however time might not be the only thing against AT&T.

According to the Wall Street Journal, the FCC's decision to undertake another review is the first such action in nine years. The FCC has also questioned AT&T's claims that customers will benefit from the acquisition and that it will create nearly 100,000 jobs.

With AT&T looking at a $3bn loss and gaining absolutely nothing, it was not surprising that the firm's management was disappointed with the FCC's decision, with Larry Solomon, SVP at AT&T saying, "It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs."

AT&T and Deutsche Telekom need the FCC to rubberstamp the deal before it can be completed. The problem for both firms is that the longer it takes for the FCC to come to a decision, the less attractive the deal becomes. µ

 

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