Just when all was quiet on the whole AT&T/T-Mobile acquisition, the U.S. Department of Justice steps in and throws a major headache into the mix.
In a nutshell, the U.S. DOJ has sued to block AT&T's $39 Billion takeover of T-Mobile USA and is holding the position that the deal would "substantially lessen competition" in the wireless market and violate U.S. antitrust laws.
AT&T's General Counsel, Wayne Watts, was surprised at this move by Justice. Watts responded by saying,
“We have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated. We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed.”
Should this deal go down the drain, AT&T would be liable to pay Deutsche Telekom, T-Mobile's parent company $3 billion plus a reduction in charges for calls into AT&T's network. A cancellation package estimated at $7 billion and plenty of incentive to fight the Justice Department's claims.
While all the legal battles take place, the FCC will continue to review the proposed merger. No word from AT&T if they will continue to mention the acquisition of T-Mobile in there advertisements. Which was a little premature to begin with.
Expect this to be another long, drawn out legal battle within the wireless industry. Oh, and to add to the misery, AT&T stocks have fallen $1.33 (4.39%) to $28.31 a share as of this posting.