AT&T reported Thursday that it posted a $6.68 billion loss for the last three months of last year largely owing to the foiled attempt of the US telecoms giant to acquire wireless carrier T-Mobile.
This translates to a loss of $1.12 per share of AT&T compared to a profit of $1.1 billion or 18 cents per share for the same quarter in 2010.
A huge part of this loss – 44 cents per share – is attributed by AT&T to its decision to drop its bid to acquire T-Mobile from parent company Deutsche Telekom.
AT&T also suffered a loss from a change to its computation method for pension benefits of employees.
Nonetheless, AT&T earned 42 cents per share after adjustments, the company said, and its revenues increased 3.6 percent to $32.5 billion for the fourth quarter.
AT&T dropped its bid to merge T-Mobile even though it said previously that it is committed to acquire the carrier in a deal which would have been worth $39 billion.
Since the deal was made public, however, it has been met with staunch opposition from various sectors in the US.
Sprint, another wireless carrier in the US, filed an antitrust case trying to block the proposed merger saying that it would “force consumers to endure higher prices and be denied the fruits of vigorous innovation” and would be “brazenly uncompetitive”.
AT&T and T-Mobile wanted this case to be dismissed saying that Sprint cannot speak for the consumer because it is a company also competing with AT&T and T-Mobile.
The US Department of Justice thought that the deal between AT&T and T-Mobile should not prosper too as it also filed a case to block the merger saying it would end up in higher price, stifling of innovation and loss of jobs for Americans.
This DOJ case was soon supported by seven US States also wanting the deal to be blocked.
Not only was the DOJ against the AT&T T-Mobile merger, so was the US Federal Communications Commission which saw its Chairman Julius Genachowski circulate a draft order to fellow commissioners of the agency saying that the deal be sent to be reviewed by an administrative law judge.
Before that, the FCC kept pushing AT&T and T-Mobile for more details about their planned deal.
For its part, the two telecoms companies tried to argue that AT&T needed the spectrum which T-Mobile would have provided saying that the deal will improve service quality and will actually promote competition and not result in the loss of jobs.
AT&T even promised measures like the bringing back of 5,000 outsourced call center jobs if the deal went through.
There was a reported effort from AT&T to get the deal with T-Mobile approved via a deal with smaller Leap Wireless wherein it sells parts of T-Mobile to the company which operates the Cricket Wireless brand if the T-Mobile acquisition goes through.
There was also the argument from analysts that if the AT&T merger with T-Mobile did not materialize, it would actually be harmful for smaller US wireless carriers including Sprint which filed a case opposing the deal.
Nonetheless, the deal still did not prosper.
Under the botched deal, AT&T has to pay $3 billion in cash $1 billion in spectrum and additional in roaming agreements if it withdrew from the bid.
The company previously said that it had reserved $4 billion for the breakup fee, perhaps seeing the deal was unlikely to become a reality.
There were reports saying that AT&T may not be liable to pay the breakup fee if the deal did not went through, but these were dispelled by T-Mobile parent company Deutsche Telekom saying that the breakup fee it has agreed with AT&T was secure.
And so it seems that the breakup fee is secure as Deutsche Telekom had said to the Wall Street Journal as AT&T has taken this huge charge on its fourth quarter balance sheet for its withdrawal from the planned T-Mobile acquisition.