AT&T Backs Out Of T-Mobile Merger, Takes $4 Billion Hit [Report]

AT&T Backs Out Of T-Mobile Merger, Takes $4 Billion Hit [Report]

AT&T has officially backed out its proposed merger with T-Mobile. The deal has been undergoing intense scrutiny from the FCC and DOJ. A $4 billion pre-tax fee charge will be paid by AT&T as agreed upon.

While a complete merger is officially dead, AT&T and T-Mobile have said that they will enter “a mutually beneficial roaming agreement” to offer better service to customers.

With the $39 billion merger down the toilet, things aren’t looking good for T-Mobile.

AT&T’s full press release:

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.

  • Gage G

    Sounds to me that T-mobile is for sale and apple should get a move on it .

    What u guys think?? Let me know.

  • ErinsDad

    I think the biggest mistake was dumping Catherine Zeta-Jones as the spokesmodel.  I’m sure the deal would have gone through if they could have had her do the presentations to the FCC.

  • zagatosz

    Wow; the regulators finally grew some balls and stoped a merger that was crap for the consumer.

  • Mystakill

    So all-in-all, AT&T pissed away more on this failed duopoly-grab than it would have cost them to gain the additional capacity and new features they claimed they would get from T-Mobile.

  • joewaylo

    If they have a purpose sure. Though COX cable has already been there. And failed.

    It probably wouldn’t benefit them very well. Verizon is more successful than the cable companies. They deliver both ways already and have done so for many years.

About the author

Alex HeathAlex Heath is a staff writer at Cult of Mac and co-host of the CultCast. He has been quoted by the likes of the BBC, KRON 4 News, and books like "ICONIC: A Photographic Tribute to Apple Innovation." If you want to pitch a story, share a tip, or just get in touch, additional contact information is available on his personal site. Twitter always works too.

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