A federal judge agreed to put the Justice Department’s challenge to the AT&T merger with T-Mobile USA on hold yesterday, but the entire deal remains in doubt. Both sides had requested the delay. The trial was scheduled for Feb. 13, and AT&T still has until Jan. 12 to file a report on whether it plans to continue with the $39 billion acquisition.
But T-Mobile lawyer George Cary said at a hearing last week, “If this case doesn’t go ahead, then the deal is over.”
Early on Thanksgiving morning, AT&T announced that it had withdrawn its petition for approval from the Federal Communications Commission after it became apparent it wouldn’t be approved. In a statement released Monday, AT&T said:
AT&T is committed to working with (T-Mobile parent) Deutsche Telekom to find a solution that is in the best interests of our respective customers, shareholders and employees. We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals so that we can deliver the capacity enhancements and improved customer service that can only be derived from combining our two companies’ wireless assets.
But the delay will make it even harder for AT&T to meet the Sept. 20 deadline to complete the deal or pay T-Mobile a $4 billion breakup fee.
Andrew Gavil, an antitrust professor at Howard University School of Law, told Bloomberg:
They’ve conceded that this deal is dead and signaled that they are going to try and have additional discussions with the Justice Department to see if there’s any kind of alternative deal they would agree to. At the same time, AT&T will have to be in discussions with Deutsche Telekom about whether they are willing to release them from this deal to discuss another deal.
As Rob Preston at InformationWeek put it:
Imagine that instead of all the wrangling over this deal, all that time, effort and money were put into something of value.