Updated March 26 at 12:27am

AT&T fails to show public benefit of T-Mobile merger, FCC finds


WASHINGTON - AT&T Inc. failed to demonstrate the public benefits of its proposed $39 billion purchase of rival T-Mobile USA Inc. would exceed its costs, U.S. regulators said in the latest challenge to the deal.

A 109-page Federal Communications Commission report concludes the combination would cause significant jobs losses and that AT&T would probably build high-speed wireless Internet connections without the merger, an agency official said in a call Tuesday outlining findings with ground rules forbidding identification by name. The conclusion undermines AT&T’s claims about the deal’s benefits, the official said.

The FCC let AT&T Inc. withdraw an application to buy T- Mobile, combining the second- and fourth-largest U.S. wireless carriers. The Justice Department sued in August to block the merger as anti-competitive, and a court hearing is set for February. The FCC moved last week to send the deal for a hearing that may take much of next year, an outcome avoided with the application withdrawal.

“The applicants have failed to meet their burden of demonstrating that the competitive harms that would result from the proposed transaction are outweighed by the claimed benefits,” according to the FCC’s report. T-Mobile offers low prices and innovation, and its potential loss as a competitive force “is a cause for serious concern,” the FCC found.

The application withdrawal leaves open the possibility AT&T may again approach the commission with a revised deal, the FCC officials said. Before the report, analysts had said that to convince regulators to approve the deal, AT&T may give up half of T-Mobile’s customers to ease concerns and gain control of assets including wireless spectrum.

‘Improper’ Procedure

The release of the report was “troubling,” Jim Cicconi, AT&T’s senior executive vice president-external and legislative affairs, said in an emailed statement. “We have had no opportunity to address or rebut its claims, which makes its release all the more improper.”

Sprint Nextel Corp., the third-largest wireless carrier and an opponent of the deal, said in a statement it applauded the FCC’s action.

“The investigation’s findings are clear: approval of AT&T’s bid for T-Mobile would lead to higher prices for consumers, eliminate jobs, harm competition, and damp innovation across the wireless industry,” Vonya McCann, Sprint senior vice president for government affairs, said in the statement.

FCC Chairman Julius Genachowski said in an e-mailed statement that “our review of this merger has had a clear focus: fostering a competitive market that drives innovation, promotes investment, encourages job creation, and protects consumers.”

AT&T and T-Mobile parent Deutsche Telekom AG said last week they had withdrawn their FCC merger applications. They acted after Genachowski asked fellow commissioners to send the deal to the hearing before an agency judge.

The companies plan to focus on objections from antitrust authorities and to return to the FCC at some point, AT&T said in a statement last week.


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