AT&T formally gives up on T-Mobile merger

Dylan Bushell-Embling
20 Dec 2011

US operator AT&T has finally given up on its plans to acquire T-Mobile USA for $39 billion, in the face of stiff opposition from regulators.

The operator has announced wireless-networks-general that after reviewing its options, it has decided to drop the deal due to the resistance from both the Federal Communications Commission (FCC) and the Department of Justice (DoJ).

AT&T it will now pay T-Mobile USA's parent company, Deutsche Telekom, a $4 billion break fee, and enter into a roaming agreement with the operator.

In its announcement, AT&T again defended the proposed merger, sticking to its prime justification that it needs more spectrum to adequately serve its large customer base.

“The actions of the FCC and DoJ to block this transaction do not change the realities of the US wireless industry,” the statement read.

“It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately.”

AT&T claimed that customers will be harmed by blocking the merger, and that that needed investment into the wireless sector will be stifled.

But both the DoJ and the FCC had filed court action to prevent the merger on the grounds that the combination of two of the USA's largest wireless operators would instead stifle competition and give AT&T too much market power. The merger would have created an operator with an estimated 43% market share.

AT&T had initially planned to fight for the deal in court, would have effectively required FCC approval to get it off the ground.

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