AT&T Will Not Buy T-Mobileby Andrew Cunningham on December 19, 2011 5:00 PM EST
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AT&T has dropped its plans for a proposed $39 billion buyout of T-Mobile, citing interference from the FCC and the U.S. Department of Justice, the latter of which filed to block the merger back in August. AT&T will pay Deutsche Telekom, T-Mobile's parent company, $4 billion in recompense, and will enter into a "mutually beneficial roaming agreement" with the company at an unspecified future date.
AT&T will continue to invest in its network through a series of smaller deals, and calls on the FCC to approve its standing request to purchase unused Qualcomm spectrum - Verizon has taken similar steps to buy wireless spectrum from other companies in a series of smaller transactions, rather than buying out its competitors outright. AT&T also claims that regulatory interference is hindering its ability to meet its customers' needs, and calls on legislators to both "enact legislation to meet our nation's longer-term spectrum needs" and get out of the way so that "companies are allowed to react quickly to customer needs and market forces."
While AT&T says that the buyout's dissolution is bad for consumers, the government sees things differently - when the DoJ filed to block the AT&T merger, it said that T-Mobile represented an important competitive force in the cellular market, and its purchase would make it next to impossible for Sprint, the U.S.'s third-largest carrier, to compete with Verizon and AT&T.
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chizow - Monday, December 19, 2011 - linkT-Mobile and Sprint may not be able to survive much longer anyways; their inability to compete is nothing new even when market share wasn't so clearly skewed towards Verizon/AT&T. Their inability to compete is why they're in this predicament of being gobbled up to begin with.
All the DOJ and FCC accomplished here was squashing any hopes for T-Mobile shareholders to maximize their holdings, as the only direction for them now is down. Sprint may be right behind them.
Big winner in all of this is Verizon. They remain the market leader and are now looking at an AT&T that's $4B lighter in the pockets with undoubtedly battered spirits over this failed deal.
JHBoricua - Monday, December 19, 2011 - linkSeems to me that their ability to compete is what made AT&T want to spend 39 Billion to buy TMobile rather than invest 3.9 Billion in their own network to reach Verizon-like coverage. This merger was going to make things worse for the US consumer. The FCC and DOJ got it right.
F^ck the TMO shareholders.
chizow - Tuesday, December 20, 2011 - linkI agree it would've made things worst in the short-term, but it just postpones the inevitable. Sprint and TMO aren't going to be around much longer, and if they are, they'll be even less of a concern than they are now. Same result, just longer route to get there.
drwho9437 - Tuesday, December 20, 2011 - linkIf Sprint and TMO go cease to exist, anti-trust will simply break up AT&T and VZ... I would think. It pretty much is already a cartel and phone service unlike TV has a history of government anti-trust action.
Targon - Tuesday, December 20, 2011 - linkYou clearly do not understand some of the problems that AT&T has had when it comes to building new cell phone towers. The LOCAL governments generally block the building of new towers, which means that building new towers in many towns just isn't an option. It has nothing to do with how much money is being spent, and is more about being blocked by idiots who want cell phone coverage, yet don't want to even allow a new tower to be built.
T2k - Monday, December 19, 2011 - link" Their inability to compete is why they're in this predicament of being gobbled up to begin with."
Ahahaha, what an utter BS - their frequencies and TMO's ]very competitive prices and features and EXCELLENT HSPA+ SPEEDS what made them a takeover target.
Stop spreading the ignorant astroturfer/ATT bullshit here, pls.
Penti - Monday, December 19, 2011 - linkThe government still hasn't supplied them with any 4G spectrum though. Their long term survival depends on that. It does hurt them that their always late in the game off getting useful spectrum licenses.
DanNeely - Monday, December 19, 2011 - linkThat's because Deutsche Telekom had already decided they wanted out of the US market and declined to bid during the 700mhz auction. They'll be getting 10mhz from ATT as part of the breakup; but that's still only half of what ATT/VZW are using for their initial LTE deployments; so without major roaming from ATT or being able to use their 3bn windfall to buy spectrum from someone else they're still in major trouble.
Penti - Tuesday, December 20, 2011 - linkIt's the damn governments job to reauction and make sure they have spectrum to use if they actually wants them to be a "disruptive force". Takes billions in loans too and DT don't really want to make up for the shortfall. T-mobile has already before the buyout plans asked the FCC/government to reauction the D-block (2x5MHz). AT&T rejected that it would be offered T-mobile, it was back in 2008 the auction occurred just two years after t-mobile had gained their pricey 3G-bands in a extra auction to make that happen. Sure they did try to get a hold of it through a new auction that never took place. They won't get anything now. Should get some cash though. But the D-block is still off limits. AT&T wants it for themselves too.
chizow - Tuesday, December 20, 2011 - linkNonsense, this deal isn't about any of TMO's technologies, there's nothing they have that 40B couldn't buy, a price tag clearly inflated by any reasonable valuations.
This deal was about:
1) grabbing TMO's market share to make AT&T #1
2) reducing competition
4) profit (longterm)
If TMO was actually competitive, they would be doing the acquiring rather than being the target for takeover. The only reason this deal even had a chance was because TMO was already struggling and had such a small % of the market.
Now the only card left to play in the deck is Sprint/TMO merger, how good does that sound? lol.