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Dropped Call: AT&T Withdraws $39 Billion Bid for T-Mobile

Dropped Call: AT&T Withdraws $39 Billion Bid for T-Mobile

In a sign that Big Business doesn’t always get what it wants from Washington, AT & T withdrew its $39 billion bid for T-Mobile on Monday. Federal regulators from the Department of Justice and the FCC concluded that the takeover bid, which would have turned AT&T into the US’s biggest wireless carrier, would have left customers with fewer choices and higher prices.

When the deal was announced in March, AT&T Chief Executive Officer Randall Stephenson spoke confidently, and (in hindsight) highly prematurely, of regulators approving the deal. Adding T-Mobile’s 33.7 million customers to AT&T’s 100.7 million subscribers would have meant that three-quarters of wireless users in the US would either be customers of AT&T or Verizon Wireless, which has 107.7 million customers. Critics of the deal contended that it would increase subscription costs: According to an analysis by Consumer Reports, T-Mobile’s monthly fees for wireless plans are about $15 – $50 less than comparable ones from AT&T.

Stephenson claimed that a merger would mean better service, more investment in faster networks and more wireless expansion in rural networks. But even after AT&T spent tens of millions of dollars to promote the deal and garnering the support of legislators, the FCC said that the merger would not benefit consumers by creating jobs — AT&T claimed 96,000 would arise from the deal — and by the expansion of wireless broadband. After the FCC announced its opposition, AT&T withdrew its application for approval on Thanksgiving day. Just this past weekend, AT&T had asked the Justice Department for a delay as it considered its options.

AT&T must now pay Deutsche Telekom, T-Mobile’s parent company, $4 billion in cash and wireless spectrum access as a breakup fee and must also enter into a “mutually beneficial” seven-year roaming agreement with the German carrier. Tero Kuittienen, an analyst, told the New York Times’s Dealbook blog that T-Mobile, the weakest of the four national wireless carriers in the US, has been “profoundly damaged” form the failed merger.

Advocates hailed AT&T’s withdraw as a victory for consumers. Said Andrew Jay Schwartzman, policy director of the Media Access Project to Politico:

“This proves that law trumps politics. I hope that it emboldens the FCC and the DOJ to take a tough position on future efforts to restrict competition in the wireless space.”

Thanks to the over 25,000 Care2 members who signed the petition to oppose this deal.

 

Related Care2 Coverage

AT&T, T-Mobile Withdraw FCC Application: How OWS Played a Part

FCC Decries Lack of Media Diversity, Stymies Low Power TV

Sprint Ad Opposing T-Mobile Takeover Pulled After Trans Community…

 

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26 comments

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7:06AM PST on Mar 6, 2012

Regardless if AT&T signed this deal or not, land-line phone companies are still needed out there for back up purposes and they did start that part of the business anyway.
Too bad this arises out of the deal:
"AT&T must now pay Deutsche Telekom, T-Mobile’s parent company, $4 billion in cash and wireless spectrum access as a breakup fee and must also enter into a “mutually beneficial” seven-year roaming agreement with the German carrier."
Because this does NOT create new JOBS in America!!

12:35AM PST on Jan 11, 2012

Good news indeed. Always happy to see anti-competitive practices fail.

3:59PM PST on Dec 26, 2011

I'm with T-Mobile so this is good news for me!

4:50AM PST on Dec 26, 2011

I despise AT&T so this is great news. They have a lot of overcharges and terrible customer service.

10:55PM PST on Dec 22, 2011

And by the way, I am also an T-Mobile Costumer. Switched from AT&T. And I'm loving it!

10:53PM PST on Dec 22, 2011

Close call, but glad the deal wasn't finalized. Wonderful news.

2:31PM PST on Dec 21, 2011

Bravo!

8:45PM PST on Dec 20, 2011

AT&T....mwahahaha...take that for trying to defy the Antitrust Act. It was created for a reason. To protect CONSUMERS!!

6:02PM PST on Dec 20, 2011

Exactly Marylin L

5:53PM PST on Dec 20, 2011

Wee! WEE! W-E-E!!!! (^_^)

I am a T-Mobile client and have been for seven years. My plan expired six years ago, but T-Mobile has allowed me to keep it for all this time. AT&—and I know from experience—does not operate like that. They would have already pressured me into another more costly plan.

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Kristina Chew Kristina Chew teaches and writes about ancient Greek and Latin and is Online Advocacy and Marketing... more
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