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AT&T loses bid to buy T-Mobile USA
31 August 2011
Sprint wins as US government decides to block AT&T bid to buy Deutsche Telekom’s T-Mobile USA
The US Justice Department has killed off AT&Ts $39
billion bid to buy T-Mobile USA from Deutsche Telekom, saying
that the deal would reduce competition and lead to higher
The department has effectively blocked the merger by filing a
complaint in a US district court, saying that removing T-Mobile
would take away a company that places important
competitive pressure on its three larger rivals
AT&T, Verizon Wireless and Sprint.
Industry commentator Jeff Kagan said: This is a big blow
to AT&T, but if it happened it would have been a big blow
to the entire industry.
Kagan said that the deal is likely to be renegotiated.
This deal is not dead, but it will be different. The
question is what will AT&T have to give up.
Wayne Watts, AT&Ts senior executive vice president
and general counsel, said: We are surprised and
disappointed by todays action, particularly since we have
met repeatedly with the Department of Justice and there was no
indication from the DOJ that this action was being
Shares of both AT&T in New York and Deutsche Telekom in
Frankfurt fell in response to the news. Shares of Sprint, which
has done most to oppose the deal, went up.
Sprint executive Vonya McCann, senior vice president of
government affairs, said: By filing suit to block
AT&Ts proposed takeover of T-Mobile, the DOJ has put
consumers interests first. Sprint applauds the DOJ for
conducting a careful and thorough review and for reaching a
just decision one which will ensure that consumers
continue to reap the benefits of a competitive US wireless
Kagan said: This is a big win for Sprint and Dan Hesse
since they have been opposed. AT&T needs more capacity.
However this is the same problem every carrier has to deal with
going forward. We need solutions. One could be to take back the
spectrum and let all carriers use it equally. Another could be
from a solution like LightSquared wants to offer.
US deputy attorney general James Cole said in a press
conference in Washington DC: Four nationwide providers
account for more than 90% of the mobile wireless connections in
America, and preserving competition among them is crucial. For
instance, AT&T and T-Mobile currently compete head-to-head
in 97 of the nations largest 100 cellular marketing
areas. They also compete nationwide to attract business and
government customers. Were the merger to proceed, there would
only be three providers with 90% of the market, and competition
among the remaining competitors on all dimensions
including price, quality, and innovation would be
He said that the departments complaint to the court
points to AT&T feeling competitive pressure from T-Mobile.
He said that an AT&T employee told the deparment that
T-Mobile was first to have HSPA+ devices in their
portfolio and AT&T added them in reaction to
potential loss of speed claims.
Cole said: A merged AT&T and T-Mobile would combine
two of the four largest competitors in the marketplace, and
would eliminate T-Mobile, an aggressive competitor, from the
At AT&T, Watts said: We plan to ask for an expedited
hearing so the enormous benefits of this merger can be fully
reviewed. The DOJ has the burden of proving alleged
anti-competitive affects and we intend to vigorously contest
this matter in court.
McCann at Sprint said: Contrary to AT&Ts
assertions, todays action will preserve American jobs,
strengthen the American economy, and encourage
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