In a latest development regarding the AT&T/T-Mobile merger, a Wall Street analyst has said that the Federal Communications Commission (FCC) chairman may be positioning to send the AT&T / T-Mobile USA merger to an Administrative Law Judge (ALJ) Review ahead of Dept. of Justice (DoJ) court action, which is unprecedented.
While there is no precedent for the FCC to act ahead of a DoJ decision, we believe the FCC is close to completing its antitrust review and is positioning to sent the AT&T / T Mobile USA merger review to an ALJ review, FBR Capital Markets analyst David Dixon wrote in a note to clients.
The ALJ will determine if the transaction makes sense from a public policy perspective with the burden on AT&T, Inc. (NYSE:T) to prove that the FCC's public policy mandate is not compromised.
In the event that the FCC actually proceeds with an ALJ review, the discovery and hearing process would likely extend this process well beyond the DoJ's trial date scheduled for Feb. 22, 2012.
However, our checks suggest the FCC is concerned with the likelihood of a court appeal process, which could easily extend the merger review well into FY12, absent FCC action, said Dixon.
The analyst also said his checks that the FCC appeared to be discounting a divestiture plan with Metro PCS or an alternative entity. The chairman's key concern appears to be the efficacy of any divestiture plan over time.
As a result, the analyst feels there is only a limited probability of merger approval. The FCC appears to be in unchartered territory here as there is no precedent for FCC action while DoJ action is being fought in the courts.
We continue to think the merger is still less likely to go through, though there is a long way to go, Dixon wrote.
On March 20, AT&T said it agreed to buy T-Mobile USA for $39 billion from Deutsche Telekom that would make it the largest mobile phone company in the U.S. with more than 40 percent market share. The deal is facing several regulatory hurdles and DoJ filed a lawsuit in August seeking to block the acquisition. The lawsuit forced AT&T to extend the closing date of the takeover to the first half of 2012.