Will AT&T's Earnings Make Up for Its Disappointments?

I wonder if there will be a footnote buried deep in AT&T's (NYS: T) earnings statement, describing what the company really thinks of the Federal Communications Commission. Actually, that wouldn't be necessary, as last December it referred to an FCC staff report as a document "so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece."

Why so enraged, and what does that have to do with AT&T's earnings statement, anyway? Simple. That FCC report was the death knell for AT&T's proposed acquisition of T-Mobile. Not that the deal wasn't on its last legs anyway, with the Department of Justice trying to stop the merger with an antitrust lawsuit, but that report really was adding insult to injury.

The injury was the $4 billion charge AT&T said it would have to take in the fourth quarter to pay off some of the penalty fee it had it owed to T-Mobile as compensation for failing to make the merger go through. AT&T, according to the penalty agreement, will also have to turn over a number of wireless-spectrum licenses to T-Mobile.

One of AT&T's reasons for pursuing T-Mobile was to gain more spectrum. Now that it has lost that opportunity and has to give up what T-Mobile called "the 'life blood' of the wireless industry," no wonder AT&T is so upset.

AT&T's need for more spectrum is not helped by the fact that it is a finite resource, and while the company was in hot pursuit of T-Mobile, it took its eye off its rival Verizon (NYS: VZ) long enough for the nation's No. 1 mobile carrier to quietly go off on its own spectrum buying spree, during which it scarfed up 122 more Advanced Wireless Spectrum, or AWS, licenses.

The challenge
AT&T finds itself behind the 8-ball in terms of spectrum, and not surprisingly, it's involved in yet another angry spat with the FCC. This one is about how the agency will run a proposed auction of unused broadcast wireless spectrum licenses. AT&T is worried that the FCC will not allow the two largest mobile carriers to even bid on the licenses. Meanwhile, the smaller national carriers, including Sprint Nextel (NYS: S) and T-Mobile, as well as the second-tier carriers such as Leap Wireless (NAS: LEAP) , MetroPCS (NYS: PCS) , and United States Cellular, are worried that the FCC won't keep AT&T and Verizon out of the auction.

Wait for it
Yes, AT&T has had plenty of challenges this quarter, as well as for most of the year, but before we make any decisions on its stock, let's look for clues in its upcoming fourth-quarter earnings statement. Analysts polled by Thomson Reuters expect the company to post earnings of $0.44 a share, a 20% loss over the same period last year.

And don't lose sight of AT&T's excellent dividend, which the company has said it will increase for the 28th consecutive year.

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At the time thisarticle was published Fool contributorDan Radovskyowns shares of AT&T. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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