Apple iPhone users, eagerly awaiting the extra bandwidth from AT&T’s purchase of T-Mobile may have to tighten their belts. The U.S. Department of Justice Wednesday filed an antitrust lawsuit, blocking approval of the $39 billion deal on grounds it will “substantially lessen competition.”
“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” DOJ attorney’s argue. No. 3 Sprint had argued combining AT&T and T-Mobile would hurt the smaller carrier’s profits.
Investors reacted to the news, pushing AT&T shares down 96 cents to $28.66 in early trading on Wall Street, Bloomberg reports. If the deal is rejected, Deutsche Telekom – parent of T-Mobile – reportedly receives $3 billion in cash from AT&T, along with some wireless spectrum and discounts on AT&T network usage worth up to $7 billion. Clearly, with a payout like this for a failed deal, both AT&T and T-Mobile knew there was a good chance the government would try to stamp down on this deal.
Because T-Mobile and AT&T shared the same type of GSM and UMTS/HSPA networks, iPhone users saw the deal as potentially offering a faster network and more stable coverage. Now, though, it looks less likely than ever that anyone will be getting a bill from AT&T-Mobile anytime soon.
