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AT&T Expects to Recognize a $4 Billion Charge in Q4 (T)

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AT&T Inc. (NYSE: T), on Thursday, said that it expects to take a $4 billion pre-tax accounting charge in the fourth quarter of 2011 to reflect the potential break up fees to Deutsche Telekom in case its takeover of T-Mobile USA fails. The fact that AT&T is considering taking a charge on the transaction indicates that the company recognizes that there is little chance its $39 billion planned takeover will get through U.S. regulators.

Regulators believe that the planned takeover, which was announced earlier this year, would destroy jobs and decrease competition. AT&T and Deutsche Telekom, the owner of T-Mobile, said on Thursday that they would continue to pursue ant-trust approval for the proposed takeover from the Department of Justice. However, the two companies withdrew applications to the industry regulator.


The Dallas, Texas-based company said in a statement on Thursday that AT&T and Deutsche Telekom are continuing to pursue the sale of Deutsche Telekom’s assets to AT&T. However, the fact that the company is preparing to take a $4 billion charge indicates that there is a thin chance the deal will be approved.

The $4 billion charge includes $3 billion cash $1 billion book value of spectrum.

The Department of Justice and the U.S. Federal Communication Commission (FCC), which is the industry regulator, continue to oppose the proposed transaction an anti-trust grounds. If AT&T completes the acquisition of T-Mobile, there will be only three national mobile carriers, which is likely to curb competition.

On Thursday, a FCC official said that the record clearly shows that in no uncertain terms the merger would result in a massive loss of U.S. jobs and investment.

Meanwhile, analysts say that the merger is less likely than ever to succeed. Analysts at Espirotp Santo said that AT&T’s decision to take a charge of $4 billion suggests that the company’s own assessment of the chances of the deal going through has fallen.

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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