AT&T was working with Deutsche Telekom to salvage the merger of AT&T and T-Mobile but they ran out of options and have announced they are giving up on the merger.
Deutsche Telekom, the owner of T-Mobile wants out of the US cellphone market. AT&T was happy to take over T-Mobile and offered Deutsche Telekom $39 billion for T-Mobile.
Feds squash deal
First the U.S. Justice Department launched a lawsuit against the mobile companies in August and planned hearings to look over all the details of the deal. The U.S. Federal Communications Commission also wanted to hold hearings as well on AT&T and T-Mobile deal.
Seeing both agencies lining up to do battle, AT&T first withdrew its FCC application to buy T-Mobile. One explanation that AT&T offered in withdrawing the FCC application for T-Mobile merger is that it wanted to first focus on The Department of Justice antitrust lawsuit to block the merger. Sensing strong objections from the U.S. Department of Justice, last week AT&T filed a joint motion with the Department of Justiceto halt proceedings in the lawsuit to block the sale. AT&T agreed to file a status report on January 12 to state their intentions.
AT&T runs out of options
Over the past week AT&T has been working with Deutsche Telekom to see how restructuring the deal, or breaking up T-Mobile into smaller parts with involvement from other US technology companies could salvage the deal. An alternative plan was no where to be found, and AT&T was running out of time.
Dealing with large companies, with large blocks of assets, a quick and easy solution was difficult to find.
German based Deutsche Telekom AG is the largest telecommunications company in Europe. The current AT&T evolved from the Southwestern Bell Corporation, one of seven Regional Bell Operating Companies created in 1983 as part of the break-up of the original AT&T. The wireless division, AT&T Mobility is the second largest wireless telecommunications provider in the United States behind Verizon Wireless.
T-Mobile USA, Inc. is the fourth-largest wireless carrier in the United States with 33.73 million customers and annual revenues of $21 billion.
What is the future of T-Mobile USA?
Deutsche Telekom wants rid of T-Mobile USA. The federal government does not look like it will allow AT&T to buy T-Mobile because sale would give AT&T more than 50% of the U.S. wireless carrier market share.
In 2005, Verizon, also one of the former "Baby Bells" that emerged out of the break of the original AT&T, acquired MCI Inc. (formerly WorldCom), to create the largest telecommunications company in the world. It would seem unlikely that Verizon could make an offer to acquire T-Mobile if the AT&T deal fails.
Sprint, currently the third largest wireless network in the United States, was one of the companies crying foul when AT&T announced they would buy T-Mobile. Has Sprint now set themselves up as the company to take T-Mobile off of Deutsche Telekom's hands?
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