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AT&T Gives Up on T-Mobile Acquisition

Monday December 19, 2011 12:55 pm PST by Arnold Kim

AT&T announced today that the company would end its bid to acquire T-Mobile USA.
The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled.
The acquisition intention was announced back in March, 2011. Under the original terms of the deal, AT&T would have paid $39 billion in cash and stock. The deal, however, was heavily criticized in an analysis by Federal regulators who believed that the merger would limit competition in virtually every U.S. city and lead to higher prices for customers.

AT&T now owes T-Mobile parent company Deutsche Telekom $3 billion in cash plus $1 billion in spectrum (at market rates) as a breakup fee for the failure of the merger. However, the Wall Street Journal reports that AT&T's bottom line will not feel the full brunt of the cost because it should be fully tax deductible, meaning the cash hit of the breakup fee would be closer to $1.5-$1.8 billion.

[ 203 comments ]


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CyberBob859
100 months ago
I wonder how much further along AT&T would be in their LTE rollout if they just took the $39 billion and invested it in wireless infrastructure versus trying to buy T-Mobile.
Rating: 14 Votes
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MJedi
100 months ago

In the absence of such steps, customers will be harmed and needed investment will be stifled.

Oh please, AT&T. :rolleyes: Cry me a river.

You mean, AT&T's finances will be harmed and needed money for our new yachts and vacation homes will be stifled. :rolleyes:
Rating: 14 Votes
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davewyman
100 months ago

T-Mobile merged with Orange in the UK and that reduced competition and they made their stores much nicer. Why was everyone in the USA against this? :confused:


Why would reducing competition be a good thing? It's what helps keep prices down.
Rating: 12 Votes
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spazzcat
100 months ago

So the back out money from AT&T should keep T-Mobile out of bankruptcy for what... another year, two tops?

AT&T will get the parts they actually wanted in the bankruptcy sale and probably save a few billion in the process.


The company will send the money to Germany and close up shop next year in the US...
Rating: 8 Votes
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rjohnstone
100 months ago

How is reducing competition a good thing? You'd be ok with paying more just to have nicer stores?

T-Mobile is going under. They're bleeding customers in droves.
Their exit from the U.S. market is only prolonged a little longer with the AT&T back-out money.
Rating: 8 Votes
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rjohnstone
100 months ago
So the back out money from AT&T should keep T-Mobile out of bankruptcy for what... another year, two tops?

AT&T will get the parts they actually wanted in the bankruptcy sale and probably save a few billion in the process.
Rating: 7 Votes
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azentropy
100 months ago

T-Mobile merged with Orange in the UK and that reduced competition and they made their stores much nicer. Why was everyone in the USA against this? :confused:


I guess because in the USA we don't consider "reduced competition" a good thing! ;)
Rating: 7 Votes
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Sixtafoua
100 months ago
YESSSS!!!!!
I don't think anyone liked this idea.
Rating: 6 Votes
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cvaldes
100 months ago

T-Mobile merged with Orange in the UK and that reduced competition and they made their stores much nicer. Why was everyone in the USA against this? :confused:

The UK has more carriers to begin with. Even after the Orange/T-Mobile UK merger, you still have five carriers.

The USA only has four nationwide mobile operators. The AT&T/T-Mobile USA merger would have reduced this to three. There is a strong argument in saying that this would have reduced competition, and more importantly, probably would result in price increases for consumers.
Rating: 6 Votes
Avatar
3bs
100 months ago

T-Mobile merged with Orange in the UK and that reduced competition and they made their stores much nicer. Why was everyone in the USA against this? :confused:


How is reducing competition a good thing? You'd be ok with paying more just to have nicer stores?
Rating: 6 Votes

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