|HP CEO Meg Whitman.|
On Thursday, AT&T ( T) announced that it expects to take a $4 billion pretax charge in the fourth quarter to reflect breakup fees associated with its controversial merger with T-Mobile USA. The proposed deal had run into opposition from the Federal Communications Commission and the Department of Justice. AT&T and T-Mobile's parent company, Deutsche Telekom ( DT), withdrew their applications for FCC approval of the deal earlier this week, focusing, at least for now, on obtaining antitrust clearance from the DoJ. The breakup fee, however, suggests that the deal's prospects look bleak, although this hardly spells the end of the world for AT&T, according to Bernstein Research analyst Craig Moffett. "For AT&T, this represents an incremental step towards resolution, and arguably at a marginally lower break-up cost than some had feared," explained Moffett, in a research note released on Thursday. "The earlier this issue is resolved, the better." There had been chatter that the breakup package could be valued at $6 billion. In a news release, AT&T said the $4 billion charge would include $3 billion in cash and $1 billion in spectrum. Shares of AT&T closed down 14 cents, or 0.51%, at $27.41 on Friday.