AT&T Inc is hanging up on its US$39 billion bid to buy smaller wireless provider T-Mobile USA, nearly four months after the US government raised concerns that it would raise prices, reduce innovation and give customers fewer choices.
The long-expected announcement left AT&T grumbling about a shortage of airwaves to expand its services, while scrappy competitor T-Mobile remains up for sale by German parent Deutsche Telekom.
The formal end of the deal was heralded by critics. No. 3 carrier Sprint Nextel Corp had feared “an undeniable duopoly” between the proposed new entity and current leader Verizon Wireless. The two companies would have controlled almost 80 percent of the cellphone market had the deal gone through.
“This result is a victory for the millions of Americans who use mobile wireless telecommunications services,” Deputy US Attorney General James Cole said. “A significant competitor remains in the marketplace and consumers will benefit from a quick resolution.”
The US Department of Justice had sued on Aug. 31 to block the merger, and the US Federal Communications Commission’s (FCC) chairman came out against it last month. That prompted the companies to withdraw their FCC application while they strategized their next move.
Sanford Bernstein analyst Craig Moffett said the announcement was “a bit of an anticlimax.”
“This is like receiving the divorce papers for a couple that’s been separated for years,” he said.
AT&T’s purchase of fourth-ranked T-Mobile, announced in March, would have made it the largest cellphone company in the US. AT&T is now the second-largest wireless carrier, with more than 100 million subscribers, behind Verizon Wireless, with 108 million. Sprint has 53 million, followed by T-Mobile at 34 million.
T-Mobile endured without much investment from its parent company and without the highest-end devices such as Apple Inc’s iPhone. It offered value packages to customers who brought phones from other carriers. Regulators feared the loss of T-Mobile as a competitor would hurt consumers.