AT&T calls off T-Mobile merger plans

Posted on Tuesday, December 20th 2011 at 1:32 p.m.

Facing intense regulatory pressure, as well as intense consumer revolt, AT&T announced yesterday that it was not going to proceed in its attempted merger with T-Mobile  .

I’ve provided a fair amount of coverage on the proposed merger but I have to admit I am surprised that the deal did not eventually work its way through the FCC and DOJ hurdles, mainly because of intense lobbying by AT&T.  By calling off the merger, AT&T is obliged to compensate T-Mobile’s parent company Deutsche Telekom to the tune of $4 billion.

AT&T’s press release announcing the end of the process takes a petulant tone:

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.

You’ll forgive me if I don’t share AT&T’s view that consumers will be hurt by having less options available to them.

Speculation exists that Sprint or Verizon may attempt to purchase T-Mobile, but given AT&T’s experience it is unlikely.

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