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AT&T Drops Bid to Acquire T-Mobile

Sarah Thomas
12/19/2011

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

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gtchavan
gtchavan
12/5/2012 | 4:46:06 PM
re: AT&T Drops Bid to Acquire T-Mobile


ATT held all of their suppliers hostage for a year for this idiotic merger and lost 4 billion in the process all of which they could have been spent on their crumbling infrastructure.  May be now they can start buildng their network again. 

kaps
kaps
12/5/2012 | 4:46:05 PM
re: AT&T Drops Bid to Acquire T-Mobile


I would bet that Cicconi and the legal team would take the knife before Stephenson. But with $4B down the tubes there's plenty of blame to go around.


The real question is -- how does AT&T convince customers that everything's OK, given its dire-straits warnings about lack of spectrum in its merger filings? Did Clearwire's spectrum just get a lot more valuable?


Seriously, this is just the start of chapter 2 of the great spectrum hunt for AT&T, isn't it?

kaps
kaps
12/5/2012 | 4:46:05 PM
re: AT&T Drops Bid to Acquire T-Mobile


I would bet that Cicconi and the legal team would take the knife before Stephenson. But with $4B down the tubes there's plenty of blame to go around.


The real question is -- how does AT&T convince customers that everything's OK, given its dire-straits warnings about lack of spectrum in its merger filings? Did Clearwire's spectrum just get a lot more valuable?


Seriously, this is just the start of chapter 2 of the great spectrum hunt for AT&T, isn't it?

Duh!
Duh!
12/5/2012 | 4:46:05 PM
re: AT&T Drops Bid to Acquire T-Mobile


You can't lose $4B plus a lot of credibility on a transparently flawed deal without seriously annoying institutional shareholders.  What's the over/under on Stephenson continuing as CEO? 

ninjaturtle
ninjaturtle
12/5/2012 | 4:46:04 PM
re: AT&T Drops Bid to Acquire T-Mobile


Did AT&T realy ever think the goverment was going to let this happen. They are dumber than I thought. Customers want more options not less. Especially with AT&T. BTW can they cut down on the commericals they show on TV. Too much of a bad thing. 

gtchavan
gtchavan
12/5/2012 | 4:46:02 PM
re: AT&T Drops Bid to Acquire T-Mobile


Spectrum schpectrum!!!  What about the investment in micro, nano and femto cells to get the user closer to the cells to avoid spectrum traffic jams, and use thier existing spectrum efficiently? what is thier excuse there?  Isn't this what every cellphone company has to deal with?  What is so special about ATT?  It was not like T-mobile spectrumn was completely empty, they had users too and had traffic jams as well and they also needed to invest in the micro, nano and femtocells. I can gaurantee you that in the past year ATT has not installed a single cell of this sort anywhere in the united states.   Thier backhaul is antiquted and should be at least 10G to support LTE and the rate of traffic growth on their network far exceeds the rate of investement to keep up with the traffic and currently they are rediculously over subsubscribed on their network.  I can gaurantee you that they have not installed a single 10G backhaul in any of their towers.  This deal clearly had more to do with executive greed than customer service.  And think they could have spent 4 billion to upgrade their network and that is all down the drain, while thier suppliers who all geared up to support them are languishing at the cusp of the biggest network revolution ever.


Anecdotally, in my neighborhood in Almaden Valley, Silicon Valley, I still don't get any ATT signal and I reported it to these clowns and they confused me with the previous owner of the house who also called in to register the complaint for lack of service.  I can tell you for sure that in my neighborhood the ATT spectrum is completely unused and the house I am living in was built in 1985 so they don't have an excuse for not putting a cell tower here. 


 

^Eagle^
^Eagle^
12/5/2012 | 4:46:02 PM
re: AT&T Drops Bid to Acquire T-Mobile


If I had a vote, he would have been gone from ATT long before the fated merger.  Frankly I don't think he has done all that great a job on several fronts.


key question: would ATT run any less well if there were no CEO?  Would anyone notice the office was empty?


of course there is also the fact that the CEO got poor advice.  


so key question #2: would ATT run any less well if they fired all those with "C" in their title and all those from the executive suite... and let the real managers manage things?  Would anyone notice if the CEO, COO, CFO, etc all were gone?  Get rid of the big salary big bonus big head dolls at the top and let those who actually know something do their jobs.


IMHO.


sailboat

kaps
kaps
12/5/2012 | 4:46:01 PM
re: AT&T Drops Bid to Acquire T-Mobile


Sailboat, I have to agree with your assessment. Puzzling as to why AT&T execs don't have to pay for their mistakes. Wireless CEO Ralph de la Vega, for instance, famously said that they didn't anticipate any problems with congestion when they first announced the iPhone. How well did that go?


ChuckJ, comparing T-Mob to AT&T is like comparing a cherry to a watermelon -- AT&T has millions more users on its network, any many more with data-chomping devices like the iPhone. Granted their backhaul infrastructure was antiquated and unready for the deluge but still -- what are they paying all those execs to do if not to predict possible changes like more data use?


On the small-cell front I would say that AT&T is probably more aggressive than not -- their recent effort to put in a DAS network in Palo Alto is testament to that strategy. Though you might want a tower on your street I am guessing your neighbors might not all feel the same way. There was opposition in Palo Alto to the DAS antennas, which are basically small cans that sit on top of light poles. Adding infrastructure is a political nightmare these days. But again, isn't this what executives are paid to forsee? If I were an AT&T shareholder or responsible board member I would be asking some questions about leadership.

kaps
kaps
12/5/2012 | 4:46:01 PM
re: AT&T Drops Bid to Acquire T-Mobile


Sailboat, I have to agree with your assessment. Puzzling as to why AT&T execs don't have to pay for their mistakes. Wireless CEO Ralph de la Vega, for instance, famously said that they didn't anticipate any problems with congestion when they first announced the iPhone. How well did that go?


ChuckJ, comparing T-Mob to AT&T is like comparing a cherry to a watermelon -- AT&T has millions more users on its network, any many more with data-chomping devices like the iPhone. Granted their backhaul infrastructure was antiquated and unready for the deluge but still -- what are they paying all those execs to do if not to predict possible changes like more data use?


On the small-cell front I would say that AT&T is probably more aggressive than not -- their recent effort to put in a DAS network in Palo Alto is testament to that strategy. Though you might want a tower on your street I am guessing your neighbors might not all feel the same way. There was opposition in Palo Alto to the DAS antennas, which are basically small cans that sit on top of light poles. Adding infrastructure is a political nightmare these days. But again, isn't this what executives are paid to forsee? If I were an AT&T shareholder or responsible board member I would be asking some questions about leadership.

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