Following opposition from the U.S. Department of Justice, the Federal Communications Commission and competing companies, Dallas-based AT&T Inc. yesterday canceled its bid to acquire T-Mobile USA from Bonn, Germany-based Deutshe Telekom.
As a result of the cancellation, AT&T will pay a one-time breakup fee of $4 billion to Deutsche Telekom in the fourth quarter. The two companies also will enter a mutually beneficial roaming agreement, according to a news release.
In March, AT&T announced an agreement to purchase T-Mobile USA via a $39 billion cash-and-stock transaction. In announcing the merger proposal, AT&T officials said the move would expand mobile infrastructure in the U.S. and increase AT&T's mobile customer base by about 33.7 million.
In recent months, AT&T faced antitrust lawsuits by the DOJ, Overland Park, Kan.-based Sprint Nextel Corp. and Ridgeland, Miss.-based Cellular South Inc., as well as opposition from FCC Chairman Julius Genachowski.
In late November, AT&T and Deutshe Telekom temporarily withdrew their pending applications to the FCC, citing the ongoing suits.
In the Dec. 19 release, AT&T officials said the merger would have provided an "interim solution to this spectrum shortage," and said the company would continue to aggressively pursue spectrum space to meet demand for 4G long-term evolution service. In a September meeting with Springfield Business Journal
, AT&T officials said the company's mobile data traffic grew 8,000 percent during the last four years, and by 2015, data traffic is expected to roughly eight times the 11 petabytes a month it was in 2012.
“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,” AT&T Chairman and CEO Randall Stephenson said in the release. “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. Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs."
In a separate news release, James Cole, deputy attorney general of the DOJ, called the merger cancellation a win.
“This result is a victory for the millions of Americans who use mobile wireless telecommunications services," Cole said in the release. "A significant competitor remains in the marketplace and consumers will benefit from a quick resolution of this matter without the unnecessary expense of taxpayer money and government resources.”
FCC Chairman Genachowski echoed similar sentiment, stating the FCC is committed to fostering a mobile marketplace that is competitive, innovative, and is poised to create investment, jobs and customer benefits.
"This deal would have done the opposite," Genachowski said in a news release. "The U.S. mobile industry leads the world in mobile innovation, and we agree with AT&T that Congress should pass incentive auction legislation that will unleash new spectrum for mobile broadband.”
AT&T also has a pending request
with the FCC that would allow the company to spend $2 billion to purchase spectrum licenses from Qualcomm, a global communications company based out of San Diego.
“To meet the needs of our customers, we will continue to invest,” Stephenson said in the release.[[In-content Ad]]