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AT&T likely bit off more than it could chew

In the past few weeks, it's becoming increasingly clear that AT&T was facing an uphill battle with regards to its wishes to acquire T-Mobile for $39 billion. Today, finally AT&T realized that its efforts were likely futile considering that it was getting plenty of pushback from both the FCC and the Department of Justice.
The company announced in a statement that it is giving up its quest to purchase T-Mobile:
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.

As witnessed by AT&T's statement above, the company is confident that the FCC and the DOJ have made a big mistake by blocking the merger and contends that customers will be the ones that will be hurt in the long run.

AT&T chairman and CEO Randall Stephenson [Source: International Business Times]

“AT&T will continue to be aggressive in leading the mobile Internet revolution,” said Randall Stephenson, AT&T chairman and CEO. “To meet the needs of our customers, we will continue to invest. 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."

As a result of the agreed upon "breakup" fee, AT&T will now have to pay $4 billion to T-Mobile parent company Deutsche Telekom AG.

This foreseeable outcome became even more clear this morning when The Wall Street Journal reported that AT&T was having difficulty in selling over 30 percent of the assets in the proposed $39 billion deal to Leap Wireless International Inc., Dish Network Corp., and MetroPCS Communications Inc.

Sources: The Wall Street Journal, AT&T

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By anactoraaron on 12/19/2011 5:16:49 PM , Rating: 2
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.

The only customers that are gonna being harmed by these events are AT&T's customers... and they're gonna be harmed monthly. Who do you think will be eating that $4 billion loss? Not the AT&T execs... maybe layoffs/pay cuts to their employees?

It's great to know that AT&T only ever thinks about 'interim solutions' to serious problems. How about you NOT try to swallow your competition as your solution and next time just put that $4 billion to better use?

Here's to hoping that T-Mobile uses their $4 billion to make their service/coverage area/data network better.

RE: Solutions?
By dgingerich on 12/19/2011 6:05:47 PM , Rating: 2
As a current AT&T customer and a relative of several T-mobile customers, I can say with absolute certainty that they biggest harm would have been to T-mobile customers.

It likely would have lead to harm to AT&T customers as well, as AT&T raised their prices due to lack of competition. ("Where are you going to go, Verizon? Sprint? HAHAHAHAHAHA!")

I will probably not have to pay for that $4 billion right away, as my prices are locked in until my current contract ends. I will also be moving to T-mobile or Sprint when this contract ends. AT&T has been hell for the last year and a half.

RE: Solutions?
By ShaolinSoccer on 12/19/2011 7:30:06 PM , Rating: 2
AT&T is the absolute worst company I have ever dealt with in my life. I actually got into raging arguments with their managers on the phone and they treated me like I was trash. I found it ironic that AT&T was paired up with Apple. I can't stand either one of them considering their bad business practices. Anyway, I ended up telling AT&T that they lost not only me as a customer, but also anyone else I can convince to not use their service...

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