AT&T and T-Mobile Merge DeniedAT&T has officially dropped its $39 billion bid to buy T-Mobile, but it still could pair up in a joint venture. Meanwhile, T-Mobile could be spun off from parent company Deutsche Telekom, or sold off bit by bit. DT could sell off its array of cell towers, for instance. Independent industry analyst Tero Kuittinen suggested to The New York Times that T-Mobile might be better off seeking partnerships with media giants such as Amazon, Facebook or Google. In announcing Monday that the merger plan had been abandoned, AT&T said it will pay the $3 billion breakup fee in the original agreement. That gives T-Mobile about a year to come up with a Plan B. Deutsche Telekom has said it doesn't want to sink more money into the U.S. market.
According to Financial Times:
"We never really got to a thorough inspection (of the merger)," René Obermann, Deutsche Telekom chief executive, said Tuesday morning, adding that authorities never appeared interested in details of the initial deal and later concessions.
AT&T wanted regulators to look at how the deal would benefit local markets, but officials focused on how it would leave only three major competitors--Verizon, AT&T and Sprint. As ZDNet's Larry Dignan put it:
The Federal Communications Commission and Department of Justice wanted a No. 4 wireless carrier in markets so bad that they were ready to risk potentially killing one to make a point.
Until T-Mobile comes up with a new plan, CNET's Marguerite Reardon foresees it even more aggressively targeting budget-minded customers, though it suffers by being the only major carrier without an iPhone. AT&T, meanwhile, still needs more spectrum to deliver the ever-increasing amount of data its customers use.