Berlin: Predictions for the $39 billion sale of US telecommunications giants AT&T and Deutsche Telekom T-Mobile darkened after the US telecoms giant said it would take a $4 billion charge in case of failure and the pair gave up on one avenue of regulatory approval.
The deal, which would result in AT&T buying T-Mobile, the US unit of Deutsche Telekom, has run into regulatory trouble in the United States.
French news agency reports on Thursday that “AT&T has announced it expects to recognise a pretax accounting charge to reflect the potential break up fees due to Deutsche Telekom in the event that the transaction does not receive regulatory approval,” the German company said in a statement.
Dow Jones Newswires reported that the charge would amount to $4.0 billion in this year’s last quarter in an acknowledgement that the deal faces an increasingly uphill battle.
The Justice Department filed a lawsuit to block the deal on August 31, saying it would harm competition. The case is scheduled to go to trial in Washington on February 13.
FCC chairman Julius Genachowski had asked the other four commissioners on the body for AT&T’s acquisition of T-Mobile to be subject to a hearing before an administrative law judge.
As a result, Deutsche Telekom said in the statement that it and AT&T had withdrawn the pending applications with the FCC and would focus their efforts on winning the approval of the Justice Department.
If successful, they would turn back to the FCC for approval.
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