Deutsche Telekom and AT&T (NYSE: 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.
The two companies said they had withdrawn applications to the Federal Communications Commission regarding the merger and intended to seek its approval again “as soon as practical.”
They took the 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,” which filed a lawsuit in August to stop the deal, AT&T said in a statement.
“Both companies are continuing to pursue the sale of T-Mobile USA to AT&T,” Deutsche Telekom stressed.
Both U.S. agencies worry that the deal would hamper competition and lead to higher prices for consumers.
AT&T also said Thursday that it plans to record costs of $4 billion in the event the deal doesn’t go through.
The charge will be taken this quarter “to reflect the potential break up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval,” AT&T said.
“AT&T Inc. and Deutsche Telekom AG 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,” AT&T said.
The $4 billion pretax one-time cost includes $3 billion in cash and $1 billion in book value of wireless spectrum, AT&T said.
Deutsche Telekom AG and AT&T Inc. made their move after the chairman of the FCC earlier this week came out against the merger.
Julius Genachowski made his position known in a document he circulated to fellow commissioners Tuesday.
He recommended sending AT&T’s proposed $39 billion takeover of T-Mobile to an administrative law judge for review and a hearing. That’s what the FCC does when it opposes a merger.
As a result of the FCC’s move, 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.
In Frankfurt, Deutsche Telekom shares were down 0.5 percent by Thursday afternoon at euro8.69 ($11.67), while the DAX index of blue-chip stocks was slightly higher overall.
The proposed deal, announced in March, would vault the combination of America’s No. 2 carrier AT&T and No. 4 T-Mobile into the top spot ahead of Verizon.
Dallas-based AT&T has about 101 million wireless subscribers. T-Mobile, the Bellevue, Washington-based subsidiary of Deutsche Telekom AG of Germany, has 34 million.
Verizon Wireless, a joint venture between Verizon Communications Inc. and Vodafone Group PLC, has about 108 million, while Sprint Nextel Corp. has 53 million.
(Bloomberg news also contributed to this report.)