When AT&T and T-Mobile decided to regroup and withdraw their merger application a few weeks back, I’m not sure they expected it to backfire the way it just has. According to the Wall Street Journal, the Department of Justice is looking to postpone (or possibly withdraw) its antitrust case because the original merger application was summarily yanked off the FCC’s table.
So what does that mean for the deal? Nothing good.
Ever since the U.S. Department of Justice filed their lawsuit, AT&T and T-Mobile have vocally maintained that a speedy trial would have to be the way to go — any legal foot-dragging would supposedly lessen the value of the merger. Judge Ellen Huvelle decided months ago that the antitrust trial would begin in February 2012, which neither party had qualms with, but the new request could mean that AT&T and T-Mobile will be locked up in these legal proceedings for even longer than they had hoped.
It’s also worth mentioning that Judge Huvelle isn’t terribly thrilled with AT&T and T-Mobile’s application withdrawal. She’s now reconsidering the speed of the trial, and is also frustrated by the possibility that the two companies could work up a new deal for the FCC’s approval. Let’s hope that isn’t what’s going on, since it would have made the last few months a huge waste of time.
The longer this whole process takes, the greater the chance that something else goes wrong. And let’s not forget the small (but non-zero) chance that T-Mobile’s parent company Deutsche Telekom could pull the kill-switch and bail out entirely if the merger’s prospects look grim enough. AT&T is also preparing for the worst: they’ve set aside $4 billion just in case they need to fulfill their compensatory obligations if the deal falls apart.
If the request is approved, the two companies have a choice to make — press on in hopes that the FCC is a little more benevolent this time around, or call it quits and go home. It’s a tough call, but we’ll just have to see what AT&T and T-Mobile come up with.