AT&T Ends Pursuit of T-Mobile USA

AT&T T-Mobile MergerAT&T’s nine-month quest to acquire T-Mobile USA from its German parent company, Deutsche Telekom AG, ended with an official announcement from the American telecom and technology giant on Monday, December 19.  The two telcos announced a merger plan in March that would have resulted in AT&T becoming the largest wireless company in the United States, ahead of the current number-one, Verizon.

The deal was opposed by the U.S. Justice Department, the Federal Communications Commission and several state attorneys general, as well as by AT&T’s competitors in the wireless telecom market, most notably Sprint.  The Justice Department filed a suit in August to block the merger on anti-competitive grounds, and the FCC followed with a finding that it would be contrary to consumer interests.  Sprint filed a separate lawsuit of its own.

On its website, AT&T said it had ended its acquisition bid for T-Mobile in agreement with Deutsche Telekom “after a thorough review of options.” However, AT&T is contractually obligated to pay a $4 billion breakup fee to Deutsche Telekom. In an earlier sign to many telecom consultants and analysts then that the deal was in serious trouble, AT&T took an accounting charge to cover the breakup fee three weeks ago. The merger would have been worth an estimated $39 billion.

AT&T had said that it needed to acquire T-Mobile in order to avert a crisis in the amount of available wireless spectrum in the United States, especially as it and other wireless carriers expand services and deploy 4G capabilities. “The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage,” AT&T said in a press release on its website. “In the absence of such steps, customers will be harmed and needed investment will be stifled.” In the wake of the failed deal, AT&T called for expedited approval by the FCC of its pending purchase of unused spectrum owned by Qualcomm. AT&T also said it will enter into a “mutually beneficial” roaming agreement with Deutsche Telekom.

Critics have said that in attempting to snap up T-Mobile, AT&T was simply trying to eliminate an agile competitor that could undercut it on price for some wireless services and equipment. They pointed to documents released to the FCC by AT&T itself that suggested that AT&T’s spectrum problems are of its own making and could be eased simply through better management of telecom services it currently offers.

T-Mobile is the country’s fourth-largest wireless provider, but Deutsche Telekom had been looking to unload it for some time because of worrisome sales trends, especially following the release of the latest iPhones.

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