AT&T Gives Up on T-Mobile Acquisition

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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.

Top Rated Comments

CyberBob859 Avatar
143 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.
Score: 14 Votes (Like | Disagree)
MJedi Avatar
143 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:
Score: 14 Votes (Like | Disagree)
davewyman Avatar
143 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.
Score: 12 Votes (Like | Disagree)
rjohnstone Avatar
143 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.
Score: 8 Votes (Like | Disagree)
spazzcat Avatar
143 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...
Score: 8 Votes (Like | Disagree)
azentropy Avatar
143 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! ;)
Score: 7 Votes (Like | Disagree)

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