Updated 5:52 pm ET, Monday, December 19
AT&T is dropping its bid to merge with T-Mobile, AT&T announced late Monday. But the company said it will enter into a “mutually beneficial roaming agreement” with T-Mobile’s German parent company, Deutsche Telekom.
Still, AT&T acknowledged in a statement to TPM that it will pay a previously agreed-to $4 billion breakup fee to Deutsche Telekom, which will show up on AT&T’s fourth quarter balance sheets.
AT&T also lashed out at U.S. regulators for blocking the merger. As AT&T’s statement reads:
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.
Indeed, the whole reason AT&T announced the $39 billion merger in the first place in March was to acquire T-Mobile’s spectrum licenses — that is, the Federal Communications Commission’s permission to use bands of the radio spectrum for mobile phone communications.
But the FCC never quite warmed up to the deal as AT&T and T-Mobile hoped.
In fact, as the months went on, it became increasingly clear that federal regulators shared the concerns of advocacy groups and AT&T’s and T-Mobile’s competitors — namely Sprint and C-Spire Wireless, both of whom sued to block the merger — that such a combination would violate U.S. antitrust laws and harm consumers by limiting options in the mobile space and driving up prices.
The Justice Department sued to block the merger in September and the Federal Communications Commission in November was reportedly considering holding additional hearings on the proposed transaction before AT&T filed to withdraw the merger from the FCC’s consideration. The FCC later released a lengthy report disparaging the merger.
AT&T and the Justice Department last week filed, and were granted, an unusual joint-motion to indefinitely delay their antitrust trial, both parties saying a trial was unnecessary given the recent turn of events. That goes doubly true now, as there is no merger for the Justice Department to try and block anymore.
The news comes a day after The Wall Street Journal reported that a last-ditch effort to salvage the merger that would have involved AT&T divesting, or selling, over 30 percent of T-Mobile’s assets to second-tier competitor Leap Wireless, had run into a brick wall.
Still, the move raises a number of questions: Namely, what will be the nature of AT&T’s and T-Mobile’s collaboration? Also, what will become of Sprint’s and C-Spire Wirelesses’s lawsuits against AT&T at this time? Finally, will anybody else attempt to acquire T-Mobile in the near future?
We’ve reached out to AT&T, T-Mobile, Sprint, C-Spire Wireless and other companies for more and will update when we receive a response.
Late update: The first reactions from opponents of the merger are beginning to roll in.
Sprint’s spokesperson on public policy John Taylor tweeted: “My first reaction: Thank you AT&T for not screwing up my Christmas and New Years.”
Public Knowledge, a technology advocacy group dedicated to protecting consumers — one of many such advocacy groups to rail against the merger — released the following statement from director Harold Feld:
“We are thankful that the proposed AT&T and T-Mobile merger is now officially dead. The unthinkable merger would have lead to higher prices and fewer choices for consumers, less innovation, and the loss of American jobs.”
It should be noted that AT&T and other groups — including industry trade organization the Communications Workers of America (CWA), which represents telecom employees and which is normally at-odds with AT&T — steadfastly contended that the merger would create jobs, about 96,000.
However, as Bloomberg reported, that figure actually came from a report prepared by the Economic Policy Institute, which was funded in part by AT&T.
We’ll continue to update with more reactions and information.
Carl Franzen
Carl Franzen is TPM Idea Lab's tech reporter. He used to work for The Daily, AOL and The Atlantic Wire (though not simultaneously, thankfully). He's never met a button that didn't need to be pressed. He can be reached at carl@talkingpointsmemo.com.
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