AT&T, T-Mobile Call Off Merger Plans

Telecom giant AT&T called off its planned merger with No. 4 wireless carrier T-Mobile USA after federal regulators raised numerous objections to the $39 billion mega-deal.

“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,” the company said in a Monday afternoon release.

AT&T said it would take a $4 billion break-up charge in the fourth quarter and would enter into a roaming agreement with T-Mobile’s parent company, Deutsche Telekom.

The dropped merger adds a potential delay to AT&T’s plans to ramp up its 4G wireless network.

Earlier this year, AT&T Arkansas President Ed Drilling told Talk Business that the undeveloped spectrum that T-Mobile had in Arkansas was much more valuable than the small number of customers the wireless carrier had in state.

He suggested the T-Mobile deal was crucial to accelerating AT&T’s 4G expansion. AT&T’s primary competitor, Verizon Wireless, has already launched 4G markets in Arkansas.

“If you look at the map of what our build would look like over the next 4 years, if this merger is completed and we’re able to hold on that spectrum, it’s just incredible,” Drilling explained.  “We’ll pretty much blanket the whole state from our standpoint with 4-G coverage.”

Drilling said his company has seen an 8,000 percent increase in data traffic in the past 3 years thanks to the explosive growth of smart phones and applications.

Today, AT&T Chairman and CEO Randall Stephenson said his firm would continue to invest to meet customer needs. He warned that lack of spectrum access could hamper serving customers as well as slow the economic recovery.

“[A]dding 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,” said Stephenson.

“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” Stephenson said.