AT&T (T) To Take $4 Billion Charge On T-Mobile Deal Concerns

Investing

Published: November 24, 2011 7:41 am

AT&T (NYSE:T) has admitted that government resistance to its deal to buy T-Mobile may wreck the chances that the transaction will happen.

The huge American telecom company said, “As a result of the FCC’s action, AT&T expects to recognize a pretax accounting charge of $4 billion ($3 billion cash and $1 billion book value of spectrum) in the 4^th quarter of 2011 to reflect the potential break up fees due Deutsche Telekom in the event the transaction does not receive regulatory approval.”

While AT&T may cancel the transaction and only be damaged by the $4 billion charge. T-Mobile has a larger problem. Owner Deutsche Telekom has invested nothing in the company and customer service has faltered. Consumers have not signed up for subscriptions in great number as they anticipate eventually being part of AT&T. And, T-Mobile has made little attempt to refresh its product line

T-Mobile’s ability to continue as a viable No.4 in the US cellular market is in trouble

Douglas A. McIntyre

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