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AT&T and Deutsche Telekom stall for time with DoJ

Extra month to sort out proposed T-Mobile US merger

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AT&T and Deutsche Telekom have given themselves an extra month to figure out how to rescue their legislator-challenged deal for T-Mobile USA.

The US Department of Justice agreed to postpone its court case against the deal, in which AT&T snaps up Deutsche's US subsidiary, until January 18.

The telcos were due in court this Thursday to argue against the DoJ's concerns that marrying America's number one wireless carrier to its number four would decrease competition in the marketplace.

The court appearance would have come just two weeks after the Federal Communications Commission, which was also looking into the merger, made public a staff report on the firms' union that was pretty damning.

The two companies had already withdrawn their application to the FCC for approval on the merger, saying they wanted to tackle the DoJ issues first.

Nevertheless, the FCC published the report, which claimed that AT&T hadn't been entirely forthcoming with regulators about the employment and other benefits of their proposed snaffle of T-Mobile USA. The commission also questioned if AT&T really needed T-Mobile to improve their wireless capacity, the main motivator for the deal.

AT&T naturally retaliated to such criticism, saying first of all that the Commission had no right to publish the report and, secondly, that it "cherry-picked" facts to suit its analysis.

Both AT&T and Deutsche have been staying strong, at least publicly, vowing to push ahead with the merger despite all opposition and the more-or-less universal opinion that the deal is doomed to failure.

Yesterday, however, AT&T gave the first signal that alternatives might be entertained by the two companies.

"AT&T is committed to working with Deutsche Telekom to find a solution that is in the best interests of our respective customers, shareholders and employees," the firm said in a statement outlining their request to the DoJ court to put proceedings on hold.

"We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals so that we can deliver the capacity enhancements and improved customer service that can only be derived from combining our two companies' wireless assets," it added.

The "whether and how" bit could be in response to the rumours that Deutsche and AT&T are looking at the option of a joint venture instead of a merger to satisfy the anti-competition concerns.

The companies now have until noon on January 12 to file a "status report", which needs to include, according to the court order:

The status of their proposed transaction, including discussion of whether they intend to proceed with the transaction at issue in this litigation, whether they intend to proceed with another transaction, the status of any related proceedings at the Federal Communications Commission, and their anticipated plans and timetable for seeking any necessary approval from the Federal Communications Commission.

A hearing will then be heard on January 18. ®

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