AT&T decides to pull out of proposed T-Mobile acquisition


In the face of stiff regulatory resistance from the DOJ and FCC, communications giant AT&T is scrapping its planned acquisition of smaller competitor T-Mobile. The $39B deal between two large companies in a field with a limited number of major players raised anti-competitive concerns.

DOJ was first to challenge the deal, and the FCC indicated it was ready to follow suit. When AT&T asked to withdraw its applications for the FCC’s regulatory approval so it could concentrate on the DOJ portion of its troubles, the FCC said OK but released extensive documentation critical of the deal anyway.

AT&T will have to pay a break-up fee of about $3B to T-Mobile, as well as provide other benefits for the smaller company. According to Reuters, its ultimate owner, Deutsche Telekom, has been trying to exit the US market and now will have to start over trying to make that goal a reality.

FCC Chairman Julius Genachowski commented, “The FCC is committed to ensuring a competitive mobile marketplace that drives innovation and investment, creates jobs and benefits consumers. This deal would have done the opposite. The U.S. mobile industry leads the world in mobile innovation, and we agree with AT&T that Congress should pass incentive auction legislation that will unleash new spectrum for mobile broadband.”

Rep. Ed Markey (D-MA), who has long had a keen interest in communications matters, also weighed in. He said, “This holiday season consumers can sing joy to the world that it’s a silent night for the AT&T – T-Mobile merger. I have consistently said that this merger would have been an historic mistake, leading to the greatest concentration of wireless services in history and undermining choice and competition. The Department of Justice and FCC Chairman Genachowski were right to have concerns about the so-called benefits to the public interest of the proposed merger. It would have been a devastating blow to wireless services, driving up prices for consumers, discouraging investment in new technologies and stifling innovation that will help America win in the global marketplace.”