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ATandT ends $39 billion T-Mobile bid

Dec 19, 2011 — by LinuxDevices Staff — from the LinuxDevices Archive
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AT&T is ending its $39 billion bid for T-Mobile, a proposed merger that had drawn considerable pushback from federal regulators and rival carrier Sprint. AT&T also announced it will pay T-Mobile parent Deutsche Telekom some $4 billion in breakup fees.

AT&T has decided to end its $39 billion bid for T-Mobile USA, the company announced Dec. 19. In the wake of the collapsing deal, AT&T will pay T-Mobile parent Deutsche Telekom some $4 billion in breakup fees, which will show up as a pretax accounting charge in the fourth quarter of 2011.

AT&T will also enter into what the statement described as a "mutually beneficial roaming agreement" with Deutsche Telekom. Further details were not disclosed.

"AT&T will continue to be aggressive in leading the mobile Internet revolution," AT&T CEO Randall Stephenson wrote in a statement. "Over the past four years we have invested more in our networks than any other U.S. company."

The statement also alluded to "actions by the Federal Communications Commission and the Department of Justice" to block the transaction, something AT&T said would not "change the realities of the U.S. wireless industry."

The carrier added that acquiring T-Mobile "would have offered an interim solution" to spectrum shortage, and that "in the absence of such steps, customers will be harmed and needed investment will be stifled."

Last week, AT&T and the Justice Department mutually agreed to stay a looming antitrust trial over the acquisition. The judge in that case agreed with the motion, and set Jan. 18 as the date for AT&T to file a report detailing any revised plans for the acquisition. In the interim, though, the carrier decided to scuttle its ambitious plans altogether.

Sprint lobbying pays off

In March, when AT&T first announced it wanted to acquire T-Mobile, some lawmakers argued the deal would harm competition. Sprint announced its intention to fight the merger with every legal tool in its arsenal, eventually filing a lawsuit. However, AT&T executives argued the deal would prove beneficial for the wireless industry, by reducing economies of scale while increasing the reach of its network.

That reasoning didn't persuade the Justice Department, however, which in late August filed an antitrust suit against AT&T in an attempt to permanently block the buyout. In November, FCC chairman Julius Genachowski began circulating a draft order referring the merger to an administrative law judge for trial, arguing that said merger wasn't in the public interest.

A commission study of internal documents obtained from AT&T and T-Mobile helped the regulators arrive at that decision, according to one FCC official. Staff reviewing those documents concluded that the merger's touted benefits did not align with the facts at hand. Even then, an FCC action against the merger couldn't begin until the Justice Department concluded its antitrust suit.

Sprint had argued repeatedly that no settlement would satisfy it. AT&T responded to its rival's campaign with a series of ads in Washington, D.C., newspapers accusing it of being disingenuous. Had the case gone to trial, certainly that war of words would have continued.

For now, it seems Sprint can claim something of a victory. And 2012 will begin with four major carriers remaining in the United States.

Nicholas Kolakowski is a writer for eWEEK.


This article was originally published on LinuxDevices and has been donated to the open source community by QuinStreet Inc. Please visit LinuxToday.com for up-to-date news and articles about Linux and open source.

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