It was also reported that AT&T has decided to take a $4 billion dollar pre-tax charge on it’s Q4 2011 accountancy sheet. $3 billion of that is to go to T-Mobile as part of a “break up” clause that was reported months ago. AT&T had agreed to pay T-Mobile the $3 billion dollars should the deal not go through. The other $1 billion is the book value of spectrum that AT&T has to give up.
More after the break
Although AT&T has said in a press release to Reuters that they made this move in order to focus on the pending Department of Justice lawsuit and getting regulatory approval from the Justice Department, it’s a pretty definite move. We’re also pretty certain that if the goal of both companies was to hone in on Department of Justice regulations they would have spared the $4 billion in payments and spectrum.
When the FCC announced earlier in the week that they were seeking an administrative hearing on the proposed merger they made it clear that they would let the DOJ handle their lawsuit first. With that in mind, AT&T and T-Mobile would have been able to focus on the DOJ issues before the FCC issues regardless.
While this may be seen as great news for T-Mobile customers, T-Mobile fans and Android lovers it may not be for T-Mobile USA. T-Mobile USA’s parent company Deutsche Telekom has made no bones about the fact that they want to get rid of their US operations and focus on their strongest markets in Europe and other parts of the world.
This essentially means that T-Mobile will need to find another suitor or merger partner. It could also mean that DT spins the T-Mobile unit off into it’s own company.
The other fact of the matter is that the damage has been done. T-Mobile stores are seeing a lot less foot traffic since AT&T’s first announcement of the merger back in March. Granted, with the right marketing and position T-Mobile could build that back up but they’ve consistently released blockbuster device after blockbuster device and they are still bleeding post paid customers.
T-Mobile’s prepaid business continues to rise with placements in 7-11’s, Dollar General’s and of course Wal Mart. T-Mobile is also the MVNO for WalMart’s private label prepaid wireless service.
The ball is officially back in T-Mobile’s court.