AT&T’s attempt to remake the U.S. wireless landscape with its huge $39 billion deal for T-Mobile may have finally reached the breaking point. AT&T (NYSE: T) and Deutsche Telekom (NYSE: DT) have asked the federal judge overseeing the lawsuit filed by the U.S. Department of Justice to postpone court hearings in the case until they can “evaluate all options.”
The Wall Street Journal noted an AT&T statement Monday morning that reversed the company’s position on whether or not court hearings should continue ahead of the case, which is scheduled for February. “AT&T and Deutsche Telekom advised Judge Huvelle this morning that they wish to stay any further Court proceedings until January 18, 2012, to allow the two companies time to evaluate all options,” AT&T said in a statement. “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.”
The request, which was made in conjunction with the DOJ, was approved. That buys AT&T and Deutsche Telekom a few more weeks to figure out what, if anything, they can salvage from the proposed deal.
Opposition to the proposed deal has hampered AT&T’s chances of getting it by skeptical government regulators almost since the day it was announced back in March, but the deal has really started to stall over the last few weeks. The Federal Communications Commission said that it could not approve the merger as currently proposed due to concerns about the combined market power of the two carriers and the prospect that the deal would result in job losses, and it released a report sharply criticizing the deal after AT&T pulled its merger application from consideration.
Meanwhile, the DOJ was preparing to challenge the deal in court in February after having articulated many of the same concerns earlier in the year. The decision to ask for a delay in court hearings leading up to that trial probably means that AT&T and Deutsche Telekom need more time to hammer out a new deal that includes divestitures or other asset sales in order to satisfy concerns about the power of the combined company.
Another interesting development in the saga surfaced Monday: Dish Network (NSDQ: DISH) is potentially interested in working with T-Mobile to share wireless spectrum if the AT&T deal is not allowed to pass, according to an interview its CEO did with Bloomberg.