Revealed: The Report That May Sink AT&Ts Bid for T-Mobile

AT&Ts proposed merger with T-Mobile isnt dead yet, but the removal of the application by AT&T, and the FCCs decision to release its report on the proposed merger could put it on life-support.

As senior FCC officials put it, the agency found that AT&T had failed to carry its burden in proving that the transaction would be in the public interest and that the proposed $39 billi! on merge r, which would have created one of the U.Ss largest wireless service providers, raised substantial material questions of fact.

The decision to retract the merger application from the FCC was AT&Ts choice and, perhaps, a last ditch effort to save the merger by returning to the commission later with a more palatable deal. However, if AT&T hoped to head off the release of the commission staffs damning report, it failed.

FCC officials, who approved the retraction, said they did not want to be seen as suppressing information, so they are releasing a heavily redacted document to the public immediately.

Among the FCCs findings in the 190-page document:

An AT&T T-Mobile merger would not result in the creation of direct or indirect jobs. Direct jobs mean the company is growing and hiring new employees. Indirect job creation could occur, for example, though the expansion of broadband to areas that previously didnt have it, which would potentially lead to new businesses and new jobs. As the FCC previously stated, it foresees direct job loss as a result of shedding duplicative services, and believes that indirect jobs would shrink, instead of grow.

AT&T claimed that without the merger, its LTE rollout would end at 80% customer population coverage in 2013. The FCC found that AT&T will likely expand to 97% LTE coverage (for its customers) with or without a merger.

Prior to AT&Ts decision to withdraw the application, the FCC had recommended sending the transaction to a judge, essentially agreeing with the U.S. Department of Justice, which also sought to block the merger on anti-competitive grounds.

As of now, the ball is back in AT&Ts court. It may still try and have T-Mobile sell off part of its business to Leap Wireless. However, with consumers and the ! media po uring over this report and, likely, publishing additional, potentially damaging, information, AT&T faces an increasingly uphill battle.

Mashable contacted AT&T for comment and received this response to the FCC actions:

The FCC has recognized that it is required by its own rules to dismiss our merger application. This makes all the more troubling their decision to nonetheless release a preliminary staff report on the merger. This report is not an order of the FCC and has never been voted on. It is simply a staff draft that raises questions of fact that were to be addressed in an administrative hearing, a hearing which will not now take place.
It has no force or effect under law, which raises questions as to why the FCC would choose to release it. The draft report has also not been made available to AT&T prior to today, so we have had no opportunity to address or rebut its claims, which makes its release all the more improper.
Jim Cicconi, AT&T Senior Executive Vice President-External and Legislative Affairs

What do you think? Should the deal die a quiet death? Let us know in the comments.

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