AT&T (NYSE: T) announced on Thanksgiving Day that it would withdraw its application for regulatory approval to acquire T-Mobile USA. AT&T also said it will take a $4 billion charge against earnings this quarter, reflecting the break-up fee it will have to pay T-Mobile--which is owned by Deutsche Telekom--if the acquisition ultimately fails.

The move by AT&T followed a decision by the Federal Communications Commission earlier in the week to send the application to an administrative law judge (which indicated the commission's lack of approval). The U.S. Department of Justice has sued AT&T to block the $39 billion acquisition, which it said would lead to higher consumer prices and less innovation. Both agencies expressed concerns that the acquisition would result in lost jobs and reduced competition.

AT&T said it still plans to fight the Justice Department's lawsuit, and if it wins it will go back to the FCC. The trial is scheduled for Feb. 13.

Many industry observers see the chances of the acquisition going through as slim.

"After today's actions, the chances that AT&T will take over T-Mobile are almost gone," said Gigi Sohn, president of consumer advocacy group Public Knowledge. "While you can never count out AT&T entirely, the fact that they pulled their FCC application speaks volumes about the company's lack of confidence that it could prove in a legal setting at the FCC the claims it spent millions of dollars to make about job creation and rural deployment of broadband, among other issues."

Withdrawing the application will stop the FCC from making public its own findings regarding the proposed acquisition's impact on the public interest, Sohn said, adding that she hopes "that AT&T would similarly withdraw its application from the Justice Department and end this charade once and for all."

For more:
- see AT&T's announcement
- see the Public Knowledge statement

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