AT&T's highly controversial $39 billion bid to become the biggest carrier in the United States by swallowing T-Mobile is over, eight months after it started.
Here's what AT&T says about dropping the deal:
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. [emphasis mine]
The T-Mobile bid was first announced last March. The proposed deal would have merged AT&T's 76 million customers with T-Mobile's 34 million customers to make it the largest carrier in the United States. Its 110 million customers would have dwarfed AT&T's closest competitor Verizon, which has 94 million customers.
Obviously, this is the kind of deal that made the government and AT&T's competitors very nervous so AT&T started lobbying hard for the deal's approval. There were claims that T-Mobile acquisition would cloak 95% of the country in blazing LTE. In its public filing to the FCC in April, AT&T said it couldn't handle the huge increases in data volume brought on by smartphones without expanding its spectrum, and that it needed T-Mobile to prevent its network from collapsing under the huge bandwidth demands. To rally support from unions, AT&T even claimed at one point that that the merger would create new jobs.
Still, for all of AT&T's efforts the deal was pretty much doomed from the start. In late August, the the DOJ filed anti-trust paperwork saying that "AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market." A week later Sprint filed its own lawsuit saying the proposed deal was illegal because the new huge AT&T would have a dampening effect on competition, which would hurt consumers.
If that wasn't enough to kill the deal, the FCC put another nail in the deals coffin in late November by issuing a 109 page report rejecting the deal and refuting many of AT&T's claims.
Now that the deal is dead, AT&T will still have to pay T-Mobile a $4 billion break up fee for pulling out. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom.
Update: Cue Sprint dancing on the deal's grave:
"Sprint commends the Department of Justice, the Federal Communications Commission and the bi-partisan group of state attorneys general who gave voice to the concerns of consumers across the country. We look forward to competing fiercely in the robust, competitive market that exists today and continuing to deliver the world class service and products that consumers have come to expect from Sprint."
[AT&T via the WSJ and Business Insider]