As soon as AT&T announced its planned deal to take over T-Mobile, the U.S. Federal government challenged it on the grounds of anti-trust measures. The $39 billion bid would have made AT&T the nation’s largest cell phone and wireless provider, putting it ahead of Sprint and other small local wireless companies such as Cincinnati Bell, and pay as you go providers.
Despite anti-trust lawsuits pending, AT&T tried to push onward with the $39 billion deal until the very end, claiming that with the surge in smart phone and tablets usage, a large wireless spectrum crunch has been felt. The acquisition of T-Mobile would have created a solution to the problem for consumers nationwide.
AT&T’s CEO, Randall Stephenson stated that the actions by the Federal Communications Commission and the Department of Justice will hurt consumers and the needed investment will not be available.
Spectrum is a very scarce resource these days for wireless companies with large companies buying up small companies with large spectrum allowances. Verizon and Sprint both this month bid on spectrum from smaller companies.
The AT&T deal would have taken AT&T, the nation’s second largest wireless provider and T-Mobile, the nation’s second largest provider and merged them into the largest provider in the nation with over 120 million subscribers.
Despite offering a solution to the spectrum issue that all wireless providers are being faced with, the Department of Justice and FCC blocked the deal on the grounds that it would create a situation in which a company would have too much power, leading to a situation of higher prices for consumers, “less choices” and “worse customer service.”
With months of challenges from the government, AT&T finally withdrew its bid, putting the troubled T-Mobile with less options to succeed. This is not necessarily the end of AT&T’s efforts to increase spectrum for their consumers, hinting that they will seek something else to buy. Adding capacity for consumers is an important task at hand, and the free market is needed to address consumer demands.
In the short term, AT&T is seeking to gain spectrum from Qualcomm valued at $1.9 billion. While a temporary fix, it will not be enough to satisfy consumer’s needs.
Part of the failed deal with T-Mobile now includes a $3 billion break up fee paid by AT&T to T-Mobile. The two companies also seek to form other agreements including a roaming deal before the end of the year. T-Mobile will need to find a new buyer though to stay afloat in the long term, so they are keeping themselves on the market.