AT&T Abandons T-Mobile Merger Due to Opposition from the Obama Administration
- Posted on December 19, 2011 at 9:30pm by
Becket Adams
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AT&T said Monday that it’s ending its $39 billion bid to buy T-Mobile USA after facing overwhelming opposition from U.S. regulators and the Obama administration.
Monday’s announcement came as little surprise after the Justice Department sued on Aug. 31 to block the merger. The deal looked further in jeopardy when the Federal Communications Commission’s chairman also came out against it.
The Financial Times reports:
The move – a rare upset for a deal of its size – represents a significant setback for AT&T under the management of Randall Stephenson, chief executive, who saw the purchase as a way to overcome a shortage of wireless spectrum facing AT&T because of the rapid growth in data-hungry smartphones such as Apple’s iPhone.
If the deal had been completed, the second and fourth-largest US mobile network operators would have been combined to create a new US market leader with more than 130m subscribers and put 75 per cent of the industry in the hands of Verizon Wireless and AT&T.
AT&T will now have to pay Deutsche Telekom (T-Mobile USA’s parent company) $3 billion in cash as a breakup fee and give it about $1 billion worth of airwaves, known as spectrum, that AT&T doesn’t need for the continued rollout of its high-speed “4G” network. It will also enter into a roaming agreement with Deutsche Telekom so that AT&T’s and T-Mobile‘s customers can use each other’s networks.
“AT&T, which announced the deal in March originally, blamed its failure on ‘the actions by the Federal Communications Commission and the Department of Justice,’” writes Paul Taylor and Helen Thomas of the Financial Times.
After AT&T killed the deal on Monday, the company is back to square one in trying to figure out how to meet the growing–and almost furious–demand for spectrum.
Randall Stephenson, who took over as AT&T’s chief executive in 2007, was not happy that the company had to abandon the merger.
“To meet the needs of our customers, we will continue to invest,” he 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 [emphasis added],” he said, according to the Financial Times.
Many people, however, believe that AT&T had overstated the spectrum crisis.
First, there is the matter of the banks. Some analysts believe that this alone was a good reason for the Justice Department and the FCC to block the deal.
See, involved in the merger deal were seven investment banks. These banks were set to pocket an estimated “$153 million in fees related to the transaction, with the bulk of M&A fees payable on the deal’s successful closing,” according to Thomson Reuters.
Antitrust experts and other industry advisers have “questioned the wisdom of AT&T and Deutsche Telekom pursuing the combination, arguing that the pairing had long been deemed almost impossible to be cleared by government watchdogs.”
Indeed, with much to gain from the merger, it might be easy to see why some analysts believe that individuals involved in the deal were overstating their case.
Then there is the question of AT&T’s actual spectrum usage.
“AT&T already has an ample supply of unused wireless spectrum that it plans to use to expand its network over the next several years,” the AP explains. “And much of T-Mobile’s spectrum is already in use, so the deal wouldn’t have resulted in fresh airwaves becoming available.”
“Furthermore, AT&T has made great strides in addressing network congestion in such cities as New York and San Francisco not by tapping its unused spectrum, but by upgrading its cell-tower equipment,” the AP continues.
Still, with the merger killed, AT&T’s best bet to acquire airwave space is through a possible spectrum auction–through the FCC. Or, if it doesn’t like that option, it can always buy spectrum from satellite cable operator Dish Network–which could require an FCC waiver.
The Associated Press contributed to this story.
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Comments (75)
suz
Posted on December 20, 2011 at 1:17amNOTE TO SELF: switch to AT&T.
Report Post »carnifex
Posted on December 20, 2011 at 4:30amNot sure why you’d switch. The story reads as AT&T needing T-Mobiles bandwith. I for one am happy. I use T-mobile for a reason. It’s the cheapest I can get the services I want.
Report Post »old white guy
Posted on December 20, 2011 at 10:08amthey should have told the obama administration to go to hell.
Report Post »JRook
Posted on December 20, 2011 at 11:16amActually the free markets work best if their are as many companies supplying cell phone services as possible. Not with a few getting bigger and bigger. It is the large corporations that are responsible for most of the anti-competitive regulations and activities.
Report Post »Poggle The Stick
Posted on December 20, 2011 at 8:39pmActually, the reason I bought an iPod Touch rather than an iPhone 4 is that AT&T was the only company with service for it.
But, after Christmas when I got it, Verizon started carrying service for it. LOL!
The world moves too quickly…
Report Post »COFemale
Posted on December 20, 2011 at 12:50amWhen will Obama keep his nose out of other companies business. This man needs to go. I am sure AT&T will find another way to bypass the Obama dictatorship.
Report Post »decendentof56
Posted on December 20, 2011 at 6:29amCofemale……
He won’t, and as soon as I saw “DOJ” in the article, I knew there would not be “justice” for AT&T.
Be ready to unite behind ONE candidate to defeat Obama, or the DO“J” will re-elect Hussein.
Report Post »foobear
Posted on December 20, 2011 at 12:31amMonopolies are kind of the opposite of a free market.
Just saying.
Report Post »crazyrightwingmom
Posted on December 20, 2011 at 1:14amFoobear: Mergers ARE free enterprise….butting in is not the government’s business.
Report Post »What is bad is when big companies stop small companies from competing…and when big companies get more help from the government, that is what happens. Corporate welfare, favors for permits, etc., stop small companies and stop the creative free enterprise spirit. Not mergers, per se.
Marineraider
Posted on December 20, 2011 at 6:39amTake a look at what is happening in agriculture. Seed companies have been bought out and we are slowly getting down to very few option. Also seeds can be patented which does not allow the producer to save seeds…….the price of food is going up as a result.
This deal has no net effect on human need so I say who cares. But if you can control food you control people……check it out
Report Post »Treaty
Posted on December 20, 2011 at 11:00amYou may wanna look up the definition of monopoly. This is no way would have made the wireless market a monopoly.
Report Post »SimpleTruths
Posted on December 20, 2011 at 11:08amYou’re exactly right. When ‘free market’ forces lead to one supplier of a goods or service then they are also free to set prices knowing there is no competition. No small company can just start up and provide meaningful competition because the monopoly can afford to sell one service at a loss (see Google) because other services more than make up the difference. Free market = false utopianism.
Report Post »foobear
Posted on December 20, 2011 at 2:33pmTreaty, we have an oligopoly right now, where the big telecom companies price fix and use their control over spectrum sales to keep out any competitors.
Crazyrightwingmom, blocking competitors is precisely what monopolies do, and is precisely what is happening right now.
We have some of the highest cell phone rates in the world, and it’s no coincidence when all the carriers choose to rates together in lockstep.
Report Post »4-The-Truth
Posted on December 19, 2011 at 11:35pmI hope non union T-Mobile thrives while unionized ATT goes belly up. Unions only build over priced problems for consumers and companies.
Report Post »plugthedamnhole
Posted on December 19, 2011 at 11:56pmVerizon is Obama’s Friend.
I think he was paying back Verizon for the great union support when they went to the executives houses to protest.
Verizon is Obama’s Friend. AT&T has been treated badly for years. Ma Bell AT&T long distance Carrier, then Verizon bought up all of the PAC Bell and was allowed to carry long distance AT&T disappeared then cingular wireless and AT&T wireless through the iPhone has made a come back.
A merger with T-Moble would bring them back to a leader but Verizon (( UNION Verizon )) again is given favorable treatment and AT&T is set back once again by the Government.
T-Moble will never thrive over Verizon, and will have to Unionize if they become that big a player. AT&T is the victim here A G A I N !!!
Think back about 10-15 years ago……. Who was Verizon ??? How did they get so big ????? How were they allowed to offer Long Distance ?????
This is Truly an OBAMA Victory…. Celebrate with Golf and a trip to Hawaii
Report Post »plugthedamnhole
Posted on December 19, 2011 at 11:58pmI still cannot get AT&T at my house.
Verizon Fios is blocking AT&T from coming into my neighborhood.
Report Post »garbagecanlogic
Posted on December 19, 2011 at 11:24pmIf obama does not want it done………..then it must be a good thing.
The U.S. Out Of The U.N.
Report Post »The U.N. Out Of The U.S.
mjgma
Posted on December 19, 2011 at 11:06pmNext you will see T-Mobile become US Government Free Cellular to all lower income people network. After all if it was a good deal for ATT why wouldn’t the government want to take it over like they took over Government Motors Acceptance Corporation formerly known as General Motors Acceptance Corporation. When this administration is opposed to something they haven’t had a chance to get their hands deep enough to pick the pockets of the participants.
Report Post »toomuchgovt
Posted on December 20, 2011 at 8:03amT-Mobile is Walmart and Target. So they kinda already are the provider for the lower income. I saw a woman paying her cell bill at Walmart with a NY Benefit card. I asked what provider the guy told me, T-Mobile.
Report Post »ColoradoMaverick
Posted on December 19, 2011 at 10:59pmMaybe they didn’t bundle enough money for Obama??
Report Post »redbone007
Posted on December 19, 2011 at 10:53pmBarack Obama invested nearly $90,000 in Skyterra, the company that later changed its name to LightSquared, along with $9,000 in a biotech company. Obama sold the stocks eight months later for a net loss of $13,000, according to The New York Times.
Read more: http://www.foxnews.com/politics/2011/09/23/soros-surfaces-on-edge-white-house-controversy/#ixzz1h2zugG7L
Report Post »sunnydecoy
Posted on December 19, 2011 at 10:50pmDish Network will end up with T Mobile anyway AT@T spent a lot of money trying to lobby this thing through. It was dirty money from day one. The AT@t lawyers are in shock that the government was not on sale this time.
Report Post »redbone007
Posted on December 19, 2011 at 10:33pmThis all have to do with Obama’s friends, Soros, and Lightsquared.
“Soros also funds four groups that have lobbied on behalf of LightSquared in regulatory and policy fights.
The Washington Examiner first reported this week that the Public Interest Spectrum Coalition, which includes the Soros-funded groups Free Press, Media Access Project, the New America Foundation and Public Knowledge, filed a petition with the Federal Communications Commission in April 2010 supporting Harbinger’s attempt to become a national player in the wireless industry over the objections of AT&T and Verizon. ”
Read the full report: http://www.foxnews.com/politics/2011/09/23/soros-surfaces-on-edge-white-house-controversy/#ixzz1h2v66dK8
Report Post »Roros
Posted on December 19, 2011 at 10:20pmWhat if AT&T justs shuts down, take your money and run like hell. Mr. Oboma please take a bow
Report Post »BannedByHuffpo
Posted on December 19, 2011 at 10:17pmNothing new here. Whenever you’ve got dems in power, they’re busy picking business winners and losers contingent upon campaign contributions to dem coffers. (see Solyndra, GM-Government Motors, etc.).
The democrat party is a shameless, bald-faced sham coalition of corrupt mealy-mouthed frauds.
Report Post »RightPolitically
Posted on December 19, 2011 at 10:13pmThe government should stay the hell out of free markets which pretty much don’t exist anymore because of their interventions. They’ve done a fine job, haven’t they? Fanny, Freddie and all the rest of the failures have government fingerprints on them.
Report Post »RepubliCorp
Posted on December 19, 2011 at 10:11pmto end this crap? and what crap has Saint Paul ended in the last 30yrs? Don’t tell me what he “will do”. 30yrs with no results, how impressive! All Mouth Paul can be your bumper sticker…
Report Post »Southernsoul
Posted on December 19, 2011 at 10:06pmI’m not sure what it is about the girl in the commercial, but she is so hot.
Report Post »redbone007
Posted on December 19, 2011 at 10:06pmThis work out great for LightSquared one of Obama’s billionaire Democrat donor Philip Falcone.
“Second is the administration’s widening venture socialism scandal involving wireless network company LightSquared, which is financed by billionaire Democrat donor Philip Falcone. Military, civilian and government experts are objecting to LightSquared‘s potential to interfere with the military’s GPS network. Air Force Commander Gen. William Shelton blew the whistle last week, claiming that the White House pressured him to modify testimony before Congress to make it more favorable toward LightSquared. He didn’t.”
http://patriotpost.us/edition/2011/09/23/digest/
Report Post »mcFirst
Posted on December 19, 2011 at 10:05pmbo wanted some more taxes on your bill – att grew as they ok’d more taxes on our bills.
they overcharged us for decades
Report Post »db321
Posted on December 19, 2011 at 10:00pmA Vote for Ron Paul guarantees Obama a second term and Constitution is gone.
Report Post »NOBAMA201258
Posted on December 19, 2011 at 10:22pmI couldn’t agree more,but will the paulistinians take off the tinfoil hats in time?
Report Post »John Morton
Posted on December 20, 2011 at 1:03amA vote for Ron Paul is a vote against 0bama, when will the dimwits wake up and realize that fact???
Only votes for 0bama, are votes for 0bama.
Report Post »Shasta
Posted on December 20, 2011 at 1:48amJohn, I do not see myself voting for Dr. Paul, but who knows? In any event, I totally agree with you. No vote is wasted, even if the outcome is less than desirable. This is what our country is founded on.
Report Post »RejectFalseIcons
Posted on December 20, 2011 at 9:09amHey guys – small but important point here.
It’s not the government picking winners and losers… it‘s the guy who finances the government’s campaigns leveraging purchased influence to back his own investments.
You know, just like New York in the 1800s or Chicago anytime.
Report Post »TPaine
Posted on December 19, 2011 at 9:53pmI’ll say one thing – AT&T is probably the worst wireless company on the planet, and taking over T-Mobile would have made T-Mobile worse than it is now. AT&T has swallowed up BellSouth, and controls most of the DSL in the Southeast. They are rated bad to terrible by everyone, including Consumer Reports. Their bait-and-switch advertising is so deceptive that it should be outlawed.
I got several of their come-ons in my snail mail, and decided to call them up and talk to them about their “can’t resist” deals. They claim a beginning package for $29.95 per month for 1 year, with a contract for 2. You’ll never get the $29.95 deal – before they even start talking to you, it goes up to $40, then $69, then over $100 per month when they finish adding mandatory features.
The best thing for this country would be to see AT&T go belly-up, but then Obama would bail them out and take control.
Report Post »kcinco
Posted on December 19, 2011 at 10:04pmI agree, terrible wireless service. I can’t wait until my contract is over next year.
Report Post »BuggiOlleo
Posted on December 20, 2011 at 7:13amI happen to like ATT.. If ATT has 4Bil and banks standing to make cash am I actually supposed to envy..Our entire economy is supposed to work..yet, another block by established Activists..appalling..I guess ATT didn’t want to play ball like COMCAST.. I used ATT now–will upgrade today..Thank you FCC.
Report Post »cookr
Posted on December 20, 2011 at 1:17pmDon’t say that. I work for AT&T, only on the landline side. Back when we were Bellsouth everything was great. At&t is a poorly run company, almost like they are too big to know what is going on everywhere.
Cingular had great service and even came out with a commercial that stated “They had the fewest dropped calls by an independent survey”, shortly before at&t bought us. Then they tried to use it but they quickly stopped after everybody started complaining about dropped calls.
I don’t understand why they made an agreement of $4b if they split knowing the deal had to go thru DOJ first.
Report Post »Clara88
Posted on December 19, 2011 at 9:53pmLeo Gerard controls the Obama Agenda
http://theulstermanreport.com/
Report Post »Beckaj
Posted on December 19, 2011 at 9:52pmThey are interfering with a merger in NC too between Duke and Progress Energy.
Report Post »CatB
Posted on December 19, 2011 at 9:46pmCould it have ANYTHING to do with this?
“Obama Gives Illegal Aliens Phones for Votes”
http://patriotupdate.com/16014/obama-gives-illegal-aliens-phones-for-votes/comment-page-2#comment-469045
Sounds like someone might not have been playing ball with the Obama regime.
TEA!
Report Post »USApatriot511
Posted on December 19, 2011 at 9:48pmPhones so all them illegals can call PEDRO and PABLO in MEXICO and tell em to bring more MARIJUANA over the border! DEPORT THESE GROSS MEXICANS!
Report Post »CatB
Posted on December 19, 2011 at 10:49pmNope .. wants Pedro and Pablo to get over here .. and get a U.S. drivers license so they can vote for Obama next November!
TEA!
Report Post »ScienceIsNotEvil
Posted on December 20, 2011 at 12:16amYou do know that the laws that enabled the “free” cell phones was signed into law by George Bush don’t you? If not why not?
Report Post »Robert-CA
Posted on December 19, 2011 at 9:42pmI’m sure that after this AT&T will ever donate to Obama .
Report Post »redbone007
Posted on December 19, 2011 at 10:22pmSoro’s objected to ATT merger. LightSquared is being investigated….received billions from team Obama.
‘Billionaire financier and liberal activist George Soros has been financially linked to LightSquared, which is at the center of allegations that the White House pressured a Pentagon commander to change his prepared congressional testimony to benefit the Virginia-based telecom company that once received a $90,000 investment from President Obama.’ READ MORE
Read more: http://www.foxnews.com/politics/2011/09/23/soros-surfaces-on-edge-white-house-controversy/#ixzz1h2sCFNcc
Report Post »redbone007
Posted on December 19, 2011 at 10:26pmNo. Soro objected to the ATT merger. They did not want ATT to overpower Soro’s investment in Lightsquared which is under investigation. Team Obama give Lightsquared billions of taxpayer money.
Report Post »sWampy
Posted on December 19, 2011 at 9:36pmClinton did this to Worldcom after making them sell off their most valuable data assets, so they could merge, they wouldn’t let them, starting the chain of events that bankrupted them and got others in jail. I hope they aren’t sinking at&t the same way.
Report Post »USApatriot511
Posted on December 19, 2011 at 9:35pmThat damn socialist Obummer is at it again! stranglin‘ capitalism and eroding ’merica! he comes for the cell phones now but hes comin’ for your guns next!
Report Post »Hey, OBUMMER, howd a commie like you ever get elected anyway? Oh yeah, with the help of SOROS, and AYERS and all your other weather underground friends in the PSL.