AT&T will have to fork over $4B to Deutsche Telekom and plans to form a roaming agreement now that it's given up on its merger plans
AT&T Inc. (NYSE: T) confirmed Monday it will no longer pursue its $39 billion acquisition of T-Mobile US Inc. . Instead, the carrier will form a roaming agreement with T-Mobile parent company Deutsche Telekom AG (NYSE: DT), as well as take a charge of $4 billion in the fourth quarter of 2011 to pay its breakup fee to DT.
AT&T had asked for a stay on legal proceedings to explore its options with Deutsche Telekom, but said in a statement Monday that after a thorough review of options, both companies have agreed to end the acquisition bid. (See DoJ, AT&T Put T-Mobile Antitrust Case on Hold.)
AT&T wrote in a statement:
"The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. 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. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled."
AT&T CEO Randall Stephen promised to continue to invest, but noted that adding capacity to meet consumer needs will require policy makers to "allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC."
In addition, Stephen said policymakers should enact legislation to meet longer-term spectrum needs in the U.S.
Why this matters
AT&T throwing in the towel wraps up more than eight months of speculation on what will happen with the mega-merger. The carrier first announced its bid to acquire T-Mobile back in March with the utmost confidence it would be swiftly approved by the Federal Communications Commission (FCC) . Since then, however, it has been met with increasing resistance, culminating with the U.S. Department of Justice suing to block the merger, and AT&T withdrawing its merger from the FCC. (See FCC OKs AT&T’s Merger Application Withdrawal , AT&T Withdraws T-Mobile Merger Application and DoJ Wants to Postpone AT&T/T-Mobile Trial.)
While AT&T has outlined what it plans to do now that the merger has failed, T-Mobile has yet to say how it will compete in a wireless market where it has been bleeding subscribers and has no clear path to Long Term Evolution (LTE).
For more
Catch up on all the merger drama here.
— Sarah Reedy, Senior Reporter, Light Reading Mobile
You May Also Like
.jpg?width=700&auto=webp&quality=80&disable=upscale)
