AT&T, T-Mobile Put Merger on Hold – For Now

AT&T T-Mobile MergerAT&T and T-Mobile USA say they’re not yet giving up on plans to merge into the country’s largest wireless carrier in spite of the fact that the two telecom giants took the step over the holiday weekend of withdrawing the applications they filed earlier this year with the Federal Communications Commission. Many telecommunications consultants have doubted all along that the merger would actually go through because of opposition from both the FCC and the U.S. Department of Justice.

The FCC weighed in last week with a finding that the merger would not serve the public interest, and referred the matter for hearing before an administrative law judge. The Justice Department had already filed a lawsuit in August to block the deal on anticompetitive grounds, with a six-week trial scheduled to begin in February 2012.

By withdrawing their FCC applications, AT&T and T-Mobile say they will focus on the antitrust litigation for now, and refile for FCC approval at an unspecified time in the future. AT&T meanwhile has taken a $4 billion accounting charge to offset a breakup fee that it will be contractually obligated to pay to T-Mobile’s parent company if the deal does not go through.

AT&T and T-Mobile are already the second- and fourth-largest U.S. wireless carriers respectively. T-Mobile USA is owned by Deutsche Telekom AG, a German firm that is the largest telecommunications company in Europe. Deutsche Telekom has reportedly been concerned with T-Mobile’s declining position in the U.S. wireless market, especially since the introduction of the iPhone. Various suitors for T-Mobile had been rumored for some time, and the proposed merger with AT&T was announced on March 20.

The Justice Department’s complaint, filed August 31 in the U.S. District Court for the District of Columbia, asserts that T-Mobile currently plays a large role in keeping wireless pricing competitive in the U.S. and in spurring innovation in cell phone equipment and services among the biggest wireless carriers.

Rival wireless carrier Sprint has opposed the AT&T/T-Mobile merger, as has Cellular South, a Mississippi-based regional wireless provider that does business in parts of the southern U.S. as C Spire Wireless, a new name that it adopted just two months ago. Both Sprint and Cellular South took the unusual step of filing complaints of their own against the proposed merger deal in September. At one time there had actually been speculation that Sprint would seek to acquire T-Mobile.

Several states joined the Justice Department lawsuit a few weeks after its initial filing. Attorneys general from New York, Washington, California, Illinois, Massachusetts, Ohio and Pennsylvania signed on to the complaint in September. Puerto Rico subsequently joined the lawsuit as well. The Kansas attorney general, although not joining the anti-merger litigation, last week urged the FCC to block the deal, a step the agency took on November 23.  Sprint is based in the Kansas City suburb of Overland Park, Kansas.

As this latest possible consolidation in the wireless industry shows, the world of telecommunications is complex and fast-changing. The telecom specialists at Telanalysis can help your business or organization stay on top of the market and get you the best telecom deals possible. We’ve offered telecom management services since 1985 to help our clients make the most informed choices and get the best, most efficient service available from telecom providers. Call us for a free consultation at 866-300-6999.

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