AT&T, Inc. and Deutsche Telekom AG, the parent company of T-Mobile, have withdrawn their applications with the Federal Communications Commission (FCC) after the agency's chairman moved to thwart AT&T's acquisition of T-Mobile USA.
Deutsche Telekom and AT&T vowed Thursday to press ahead with the planned sale of the German company's T-Mobile USA unit to the U.S. cell phone operator despite concerns raised by American authorities.
AT&T said it plans to take a pretax accounting charge of $4 billion in the current quarter to reflect the break-up fees that would be due to Deutsche Telekom if regulators block the deal.
The two telecommunications giants said they were still committed to the merger and were only withdrawing the applications to focus their efforts on winning approval from the Department of Justice (DOJ), which has filed a lawsuit against the takeover.
"Both companies are continuing to pursue the sale of T-Mobile USA to AT&T," Deutsche Telekom stressed.
The No. 2 and No. 4 wireless carriers announce a $39 billion merger deal that would create a company with nearly 130 million subscribers, easily leapfrogging Verizon Wireless for the No. 1 spot.
AT&T and T-Mobile both withdrew their merger applications from the FCC, and an agency spokeswoman told The L.A. Times on Thursday that the agency would "consider the request."
Although the FCC said they will consider the request AT&T feels they won’t need the approval of the agency.
"We have every right to withdraw our merger from the FCC, and the FCC has no right to stop us," said Wayne Watts, AT&T's general counsel, in a statement on Friday. "Any suggestion the agency might do otherwise would be an abuse of procedure which we would immediately challenge in court.”
AT&T's merger plan has faced mounting challenges, including a Justice Department suit to block the deal and similar lawsuits from seven state attorneys general and from rivals Sprint Nextel Corp. (S) and C Spire Wireless (CELLSO.XX).
Had FCC commissioners approved the chairman's recommendation, AT&T would have faced a hearing before an administrative law judge after it completed its federal Justice Department trial.