AT&T abandons T-Mobile merger plans (updated)
AT&T has officially given up on its plans to buy out T-Mobile. In a statement, the company said it had agreed with Deutsche Telekom to cease pursuing a merger, which has come under increasing scrutiny from both the government and advocacy groups. The failed attempt to snatch up its smaller, German-owned competitor will ultimately cost Ma Bell $4 billion and it's not paying those dues without some grumbling. In the release the FCC and DOJ bear the brunt of AT&T's ire, which are accused of harming customers and exasperating the already looming spectrum shortage. Of course, this also hurts the carrier's ability to compete with Verizon which has been on a spectrum buying spree as of late. As a consolation prize Deutsche Telekom and AT&T have entered a roaming agreement, though the structure of that deal and whether it's purely international or domestic roaming remains to be seen. The complete press release from AT&T can be found after the break.
Update: And Sprint chimes in on the whole brouhaha:
"Earlier today, AT&T terminated its definitive merger agreement with Deutsche Telekom to acquire T-Mobile USA. This is 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.
"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."
Update 2: Spencer Ante from the Wall Street Journal just tweeted a few more interesting nuggets: as part of T-Mobile's prize for the merger's failure, it will receive AWS spectrum in a grand total of 128 cellular markets (which includes 12 of the top 20 nationwide markets). Additionally, AT&T's roaming agreement with T-Mo lasts for seven years, increasing its coverage from 230 million potential customers to 280. We'll update with more information as it comes in!
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AT&T Ends Bid To Add Network Capacity Through T-Mobile USA Purchase
Company Reaffirms Its Commitment to Mobile Broadband Leadership
Dallas, Texas, December 19, 2011
AT&T Inc. (NYSE: T) said today that after a thorough review of options it has agreed with Deutsche Telekom AG to end its bid to acquire T-Mobile USA, which began in March of this year.
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 will continue to be aggressive in leading the mobile Internet revolution," said Randall Stephenson, AT&T chairman and CEO. "Over the past four years we have invested more in our networks than any other U.S. company. As a result, today we deliver best-in-class mobile broadband speeds – connecting smartphones, tablets and emerging devices at a record pace – and we are well under way with our nationwide 4G LTE deployment.
"To meet the needs of our customers, we will continue to invest," Stephenson said. "However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should 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. Second, policymakers should enact legislation to meet our nation's longer-term spectrum needs.
"The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces," Stephenson said.
To reflect the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom.
*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
