AT&T Ceases $39 Billion T-Mobile Bid, Agrees to Pay $4 Billion in Fees

AT&T has decided to end its $39 billion bid for T-Mobile USA, the company announced in a statement Dec. 19.

“AT&T will continue to be aggressive in leading the mobile Internet revolution,” AT&T CEO Randall Stephenson wrote in that statement. “Over the past four years, we have invested more in our networks than any other U.S. company.”

The statement also alluded to actions by the Federal Communications Commission and the Department of Justice to block the transaction, something AT&T said would not change the realities of the U.S. wireless industry. The carrier added that acquiring T-Mobile would have offered an interim solution to spectrum shortage, and that in the absence of such steps, customers will be harmed and needed investment will be stifled.

In the wake of the collapsing deal, AT&T will pay T-Mobile parent Deutsche Telekom some $4 billion in breakup fees, which will show up as a pretax accounting charge in the fourth quarter of 2011. It will also enter into what the statement described as a “mutually beneficial roaming agreement” with Deutsche Telekom, although further details were not disclosed.  

Last week, AT&T and the Justice Department had mutually agreed to stay a looming antitrust trial over the acquisition. The judge in that case agreed with the motion, and set Jan. 12 as the date for AT&T to file a report detailing any revised plans for the acquisition. In the interim, though, the carrier decided to scuttle its ambitious plans altogether.

Earlier in 2011, when AT&T first announced it wanted to acquire T-Mobile, a number of parties reacted poorly. Some lawmakers argued the deal would harm competition. Sprint announced its intention to fight the merger with every legal tool in its arsenal, eventually filing a lawsuit.

However, AT&T executives argued the deal would prove beneficial for the wireless industry, by providing economies of scale while increasing the reach of its network. That reasoning didn t persuade the Justice Department, however, which by September had filed its antitrust suit to permanently block the buyout. In November, FCC chairman Julius Genachowski began circulating a draft order referring the merger to an administrative law judge for trial, arguing that said merger wasn t in the public interest.

A commission study of internal documents obtained from AT&T and T-Mobile helped the regulators arrive at that decision, according to one FCC official. Staff reviewing those documents concluded that the merger s touted benefits did not align with the facts at hand. Even then, an FCC action against the merger couldn t begin until the Justice Department concluded its antitrust suit.

To read the original eWeek article, click here: ATandT Ends $39 Billion T-Mobile Bid, Will Pay $4 Billion in Fees

CIO Insight Staff
CIO Insight Staff
CIO Insight offers thought leadership and best practices in the IT security and management industry while providing expert recommendations on software solutions for IT leaders. It is the trusted resource for security professionals who need network monitoring technology and solutions to maintain regulatory compliance for their teams and organizations.

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