AT&T executives with dreams of a consolidated wireless marketplace are not having a happy Thanksgiving holiday today as the company quietly released news it is withdrawing its application with the Federal Communications Commission to buy T-Mobile USA from German parent Deutsche Telekom.

“The deal is over the cliff and falling rapidly into the sea,” one unnamed analyst told Bloomberg News this morning.  “The only thing left to do is cut T-Mobile a check for $6 billion in cash and spectrum.”

AT&T’s accountants are evidently preparing to do just that, booking at least $4 billion in “one time costs” this quarter, representing a significant chunk of the breakup fee.  Even as AT&T’s bookkeepers bow to the likely unconsummated marriage with T-Mobile, AT&T’s spin for the media is that the deal is still a go; the company only withdrew the FCC application to fully focus on the Justice Department case against the merger.

Odds-makers on Wall Street don’t buy it.

“What that tells you is AT&T’s auditors have now concluded that the deal is likely to fail and have forced the company to take that charge,” Will Draper, an analyst at Espirito Santo told Bloomberg.

Andrew Schwartzman, policy director of Media Access Project, called the move an “act of desperation.”

T-Mobile executives insist the deal is still on, however. AT&T and Deutsche Telekom plan to renew their attempt to gain FCC approval “as soon as practical,” T-Mobile executives claim. “This doesn’t mean that anything is over,” said Andreas Fuchs, a spokesman for the German company.

One bonus for AT&T: the decision to withdraw the application from the FCC will let AT&T maintain confidentiality of documents filed with the Commission in support of the merger.  An unnamed FCC official has been leaking portions of them to the media all week.  Among the most important revelations: AT&T’s public claims that the merger will create jobs ran headlong into their own internal documents, which guarantee the exact opposite, according to the official.

If AT&T’s merger with T-Mobile is approved, it would create an industry behemoth with 134 million customers, dwarfing current market leader Verizon Wireless.

Draper says the $4-6 billion award to T-Mobile for a merger failure still won’t be enough for the company to upgrade its network.

“They’re still going to have a very, very big problem in the U.S., which is going to cost them maybe $10 billion to fix,” he said.