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AT&T drops bid to acquire T-Mobile

Four months after government moved to block merger, communications giant gives in

It’s official. AT&T has dropped its bid to acquire T-Mobile USA, which is owned by Germany-based Deutsche Telekom AG.

Last week, the communications giant said in a statement that it was considering dropping the $39 billion purchase after a district judge in Washington, D.C., granted a request by both AT&T and the Department of Justice (DOJ) to postpone the government’s proceedings to challenge the merger. In a Dec. 12 statement in response to the judge’s postponement, AT&T said, “We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals.”

Yesterday, it put an end to any speculation. In a statement, the communications giant said that after a thorough review of options it has agreed with Deutsche Telekom AG to end its bid to acquire T-Mobile USA. The company added that although it is dropping its merger bid, the U.S. wireless industry continues to have “a mounting need for more spectrum that has not diminished and must be addressed immediately,” and the merger would have offered a solution. Without a solution, “customers will be harmed and needed investment will be stifled,” the statement said.

“To meet the needs of our customers, we will continue to invest,” Randall Stephenson, AT&T chairman and CEO, said in the statement. “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.”

AT&T first announced its plan to buy T-Mobile in March. Several months later, the DOJ sued to block the deal, claiming such a merger would result in millions of consumers “facing higher prices, fewer choices and lower quality products for mobile wireless services.”

As it had previously announced, AT&T will take a $4 billion pretax charge in the fourth quarter of 2011 as a result of dropping the takeover bid.  

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Cathleen Flahardy

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