San Diego Business Journal

AT&T Drops Acquisition Plan, Citing Opposition

Thursday, December 22, 2011

Dallas-based AT&T Inc. will not tie the knot with rival cellphone carrier T-Mobile USA Inc., a unit of Deutsche Telekom AG, the two companies announced Dec. 19.

In a statement, AT&T blamed the failure of the $39 billion deal on opposition from the U.S. Department of Justice and the Federal Communications Commission.

“Both companies are in agreement that the broad opposition (by government regulators) … is making it increasingly unlikely that the transaction will close,” Deutsche Telekom said, in a statement.

The companies had originally announced the acquisition plan in March.

AT&T said consumers would suffer with the turn of events. Not everyone saw the failed acquisition attempt as a bad sign, however. Groups applauding the outcome included the California Public Interest Research Group, or Calpirg, which had argued the merger would have concentrated too much power in the hands of too few wireless providers, leading to less competition in the market.

AT&T will pay Deutsche Telekom a $3 billion breakup fee and provide T-Mobile with wireless spectrum in 128 markets, including San Diego.

AT&T warned of a shortage of spectrum and said in a Dec. 19 statement that the FCC should move “expeditiously” to let the carrier use spectrum acquired from Qualcomm Inc. in December 2010.

— Brad Graves