Justice Blocks AT&T / T-Mobile Merger
Justice Blocks AT&T / T-Mobile
Merger
The US Department of Justice announced Wednesday it was filing a lawsuit to block AT&T's proposed buyout of T-Mobile USA from Deutsche Telekom to preserve competition in the US wireless market. “The department filed this lawsuit because we feel the combination of AT&T and T-Mobile will result in tens of millions of consumers, all across the United States, facing higher prices, fewer choices, and lower-quality products for their mobile wireless services,” explained James Cole, the deputy attorney general.
The decision to block the merger is a surprising blow to AT&T, the world's second-largest wireless carrier behind Verizon, as its CEO Randall Stephenson has predicted the merger would be approved for months. AT&T shares fell more than 3 percent on the news, while shares of Sprint, the biggest opponent to the merger, rose more than 6 percent. According to reports, AT&T was so confident the deal would go through it put itself in a position to owe a hefty break-up fee to T-Mobile now that the deal has been shot down.
AT&T officials vowed to bring back a substantial number of jobs to the US if the $39 billion buyout had been approved, but the jobs were not enough incentive for officials at DOJ and the FCC to overlook their antitrust concerns over the deal. The merger would have vaulted AT&T past Verizon as the nation's largest carrier, while Sprint would see the gap between itself and the top two grow significantly larger.
The US Department of Justice announced Wednesday it was filing a lawsuit to block AT&T's proposed buyout of T-Mobile USA from Deutsche Telekom to preserve competition in the US wireless market. “The department filed this lawsuit because we feel the combination of AT&T and T-Mobile will result in tens of millions of consumers, all across the United States, facing higher prices, fewer choices, and lower-quality products for their mobile wireless services,” explained James Cole, the deputy attorney general.
The decision to block the merger is a surprising blow to AT&T, the world's second-largest wireless carrier behind Verizon, as its CEO Randall Stephenson has predicted the merger would be approved for months. AT&T shares fell more than 3 percent on the news, while shares of Sprint, the biggest opponent to the merger, rose more than 6 percent. According to reports, AT&T was so confident the deal would go through it put itself in a position to owe a hefty break-up fee to T-Mobile now that the deal has been shot down.
AT&T officials vowed to bring back a substantial number of jobs to the US if the $39 billion buyout had been approved, but the jobs were not enough incentive for officials at DOJ and the FCC to overlook their antitrust concerns over the deal. The merger would have vaulted AT&T past Verizon as the nation's largest carrier, while Sprint would see the gap between itself and the top two grow significantly larger.
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