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Tuesday December 20, 2011 1:52 pm

AT&T drops plans to acquire T-Mobile


AT&T T-Mobile dead

AT&T on Monday announced that it has ended its bid to acquire T-Mobile.

AT&T will incur a pre-tax "breakup fee" of $4 billion in the fourth quarter and will enter into a roaming agreement with T-Mobile's parent company, Deutsche Telekom.

AT&T maintained that the deal would have benefited the U.S. wireless industry. But in recent months, it faced challenges from the Department of Justice and Federal Communications Commission, both of which found that the merger would not be in the public's interest. That opposition, however, does "not change the realities of the U.S. wireless industry," AT&T said.

"AT&T will continue to be aggressive in leading the mobile Internet revolution," Randall Stephenson, AT&T chairman and CEO, said in a statement. "To meet the needs of our customers, we will continue to invest."


Stephenson, however, reiterated that the wireless industry needs more spectrum, and said the government should "allow the free markets to work" to make that happen. AT&T pushed the FCC to approve its acquisition of spectrum from Qualcomm and said "policymakers should enact legislation to meet our nation's longer-term spectrum needs."

On an otherwise quiet Sunday afternoon in March, AT&T surprised the tech community when it announced plans to acquire T-Mobile for $39 billion. AT&T argued that the purchase would help stop the spectrum crunch and spur the companies' deployment of 4G service. Detractors, especially rival Sprint, countered that the deal would lead to a duopoly, with AT&T and Verizon controlling the wireless industry, and likely lead to job cuts and price hikes.

By August, it was clear that the Justice Department agreed, and it sued to blocked the merger, arguing that it was anti-competitive. The FCC followed up in November with a similar ruling, prompting AT&T to pull its merger application from the commission. Most recently, activity on the DOJ trial had been pushed to January, and AT&T said it was "considering whether and how to revise our current transaction."

In a statement, Sprint—which along with regional carrier C Spire had also sued to stop the merger—said in a statement that AT&T's move was the "right decision for consumers, competition and innovation in the wireless industry."

"From the beginning, Sprint has stood with consumers who spoke loudly and clearly that AT&T's proposed takeover of T-Mobile would create an undeniable duopoly that would have resulted in higher prices, less innovation and fewer choices for the American consumer," said Vonya B. McCann, senior vice president of government affairs at Sprint. "Sprint commends the Department of Justice, the Federal Communications Commission and the bi-partisan group of state attorneys general who gave voice to the concerns of consumers across the country. We look forward to competing fiercely in the robust, competitive market that exists today and continuing to deliver the world class service and products that consumers have come to expect from Sprint."

This article, written by Chloe Albanesius, originally appeared on PCMag.com and is republished on Gear Live with the permission of Ziff Davis, Inc.

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