AT&T announced on Monday that the company had dropped its bid to acquire T-Mobile. The company said that it can’t overcome objections to the acquisition raised by both the Obama administration’s Department of Justice (DOJ) and the Federal Communications Commission (FCC).
While AT&T capitulated to those regulatory hurdles, it did so defiantly. Calling the U.S. wireless market, “one of the most fiercely competitive industries in the world,” AT&T said that, “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.”
T-Mobile is the the 4th largest carrier in the U.S. market, and #2 AT&T had hoped to use the company to catapult itself past Verizon, the largest carrier in the U.S. The US$39 billion deal to purchase T-Mobile was announced in March, but immediately drew protests from the FCC, the DOJ, and AT&T competitors Sprint and Verizon.
All along, AT&T argued that it needed the merger and T-Mobile’s bandwidth to remain competitive, but regulators were concerned that it would impose too much of a restriction on competition in the U.S.
In a counterattack included in its decision to drop the deal, AT&T said, “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.
AT&T will be taking a pretax $4 billion accounting charge during the December quarter. This includes both its costs for the failed merger effort and contractual penalties AT&T must pay to T-Mobile’s parent company, Deutches Telecom.
Lastly, AT&T also announced a new roaming deal with Deutches Telecom, but it has yet to lay out the specifics of that deal.