After months of wrangling—and certainly not for a lack of trying—AT&T Inc., has announced that it is walking away from its bid to acquire T-Mobile USA, from Deutsche Telekom AG, which began in earnest in March of this year. If the deal had been approved it would have created the largest cellular carrier in the country and it would have ultimately shrunk the big four carriers in the U.S. to a mere three.
The mounting need for more spectrum has not diminished and must still be addressed immediately, says AT&T, which had pinned its hopes for growth on the acquisition. 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 tried to argue to the FCC (Federal Communications Commission) and the DOJ (Dept. of Justice).
It appeared as if the DOJ was pretty much set against the AT&T/T-Mobile merger almost from the beginning. And in fact, the DOJ hit AT&T issued an antitrust lawsuit only five months after the deal was announced. It didn’t take long for lawyers and professors putting the kibosh on the deal. And from that point on the merger was destined to face an uphill battle.
And while AT&T is steadfast in its commitment to providing customers with the best possible wireless service it can, the company realizes that the actions of the FCC and the DOJ to block the transaction have made it all but impossible for the world’s No. 2 U.S. wireless carrier to move forward with any other decision, but to scrap the deal.
In addition to pressure from the government, AT&T was getting a lot of opposition from the likes of Sprint, the third largest wireless carrier, which was clearly intimidated by what AT&T acquisition could mean to the overall subscriber marketplace. Sprint’s outright crying in Washington did not fall on deaf ears and now clears a path for it to make a bid for T-Mobile USA if it so desires.
Therefore, I concur that the FCC needs to act accordingly. First, AT&T is asking policymakers to free up spectrum which includes expediting AT&T’s acquisition of unused Qualcomm spectrum currently pending before the FCC. I think that’s only fair. Didn’t the FCC just approve radio spectrum to Verizon that Cox Communications offered up for a nice little pricetag? I think it’s only right that we all play fair here.
What’s more, the lack of spectrum continues to be a growing problem for the wireless industry and the government needs to act accordingly to respond to these problems.
As a result of the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in Q4 2011. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom.
Maybe it goes to show that if you make enough noise about something you will eventually get your way. Perhaps we should all use the same approach regarding the NTSB’s proposed ban on personal electronics devices?