AT&T's proposed merger with T-Mobile is looking more and more like it will fail and AT&T is already giving an advanced warning of the consequences to its business if the two wireless carriers won't merge their operations. In a press release issued late on Wednesday, AT&T said that it "expects to recognize a pretax accounting charge of $4 billion ($3 billion cash and $1 billion book value of spectrum)" in the fourth quarter of 2011 due to the fees it will have to pay T-Mobile's parent company Deutsche Telekom "in the event the transaction does not receive regulatory approval."
AT&T first proposed the merger with T-Mobile back in March 2011 for a whopping $39 billion. At the time AT&T claimed that the deal would help the company improve its network infrastructure. However, the merger proposal has been questioned by many groups and even some lawmakers who have expressed concerns that if such a merger happens it would allow for less competition in the wireless phone business. In August the US Department of Justice filed a lawsuit to stop the merger. That trial is expected to start in February.
This week, AT&T's plans hit a new bump in the road as the Federal Communications Commission's chairman Julius Genachowski said he was against the merger with T-Mobile. He also recommended that the merger proposal be sent to an administrative law judge for another review. As a result of Genachowski's actions, AT&T said on Wednesday it is withdrawing its FCC application and will concentrate its efforts on the trial with the Justice Department in order to get the T-Mobile merger approved.