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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.


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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


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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