January 2, 2012

AT&T drops its $39 bil T-Mobile bid - USATODAY.com

LOS ANGELES — AT&T Inc. is hanging up on its $39billion bid to buy smaller wireless provider T-Mobile USA, nearly four months after the U.S. government raised concerns that the deal would raise prices, reduce innovation and give customers fewer choices.

The long-expected announcement left AT&T grumbling about a shortage of airwaves to meet growing demand, while scrappy competitor T-Mobile remains up for sale by German parent Deutsche Telekom.

The formal end of the deal was heralded by critics. No.3 carrier Sprint Nextel Corp. had feared "an undeniable duopoly" between the proposed new entity and current leader Verizon Wireless. The two companies would have controlled over almost 80 percent of the cellphone market had the deal gone through.

"This result is a victory for the millions of Americans who use mobile wireless telecommunications services," Deputy U.S. Attorney General James Cole said. "A significant competitor remains in the marketplace and consumers will benefit from a quick resolution."

The Justice Department had sued on Aug.31 to block the deal, and the Federal Communications Commission's chairman came out against it last month. That prompted the companies to withdraw their FCC application while they strategized their next move.

AT&T's purchase of fourth-ranked T-Mobile, announced in March, would have made it the largest cellphone company in the U.S. AT&T is now the second-largest wireless carrier, with more than 100million subscribers, behind Verizon Wireless, with 108million. Sprint has 53million, followed by T-Mobile at 34 million.
T-Mobile endured without much investment from its parent company and without the highest-end devices such as Apple Inc.'s iPhone. It offered value packages to customers who brought phones from other carriers.

Regulators feared the loss of T-Mobile as a competitor would hurt consumers.

AT&T will now have to pay Deutsche Telekom $3billion in cash as a breakup fee and give it about $1billion worth of airwaves, known as spectrum, that AT&T doesn't need for the continued rollout of its high-speed "4G" network.

by Ryan Nakashima USA Today Dec 20, 2011


AT&T drops its $39 bil T-Mobile bid - USATODAY.com

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