AT&T has announced that it is giving up its attempt to buy rival T-Mobile. The carrier has always characterized this move as a way to get additional wireless assets, but the U.S. government opposed it because it would reduce competition.
The attempt by the second biggest carrier in the U.S. to buy the fourth largest was announced back in March. In August, however, the Department of Justice (DOJ) filed a lawsuit to prevent this deal from going forward, saying it would result in higher prices for consumers and lost jobs as AT&T would lay off redundant employees.
AT&T and T-Mobile’s parent company, Deutsche Telekom, then spent several months trying to come up with options that might answer the DOJ’s complaints. These efforts failed, and the two have officially broken off this deal.
A statement from AT&T says:
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.
AT&T says that, in the wake of the failure to acquire T-Mobile, that the two have reached “a mutually beneficial roaming agreement”. This might improve the wireless service of their customers in areas where one carrier has good coverage but the other does not.
Part of this now-defunct deal was a clause that compensated T-Mobile for lost business if it didn’t go through. This is intended to make up for customers who went with AT&T or a rival carrier instead of T-Mobile during the months it appeared T-Mobile was going to be absorbed. This compensation includes $3 billion in cash and about $1 billion worth of new spectrum. To pay this, AT&T has taken a $4 billion charge on its books for Q4.