AT&T said Monday it has dropped its bid to purchase T-Mobile and will pay $4 billion as a penalty for not completing its deal.
The decision puts an end to an audacious and rocky nine-month quest by the nation’s second- and fourth-largest wireless operators to jointly feed America’s insatiable appetite for smartphones, tablets and other wireless devices.
But because the deal would have landed AT&T a total of more than 120 million customers, federal regulators fought the merger — the first major corporate deal to be struck down during the Obama administration.
AT&T and Deutsche Telekom, the parent company of T-Mobile, said it tried to find other ways to salvage its deal but ultimately agreed to break it off. The penalty for AT&T was a penalty fee valued at $4 billion in cash and airwaves.
AT&T, which has poured millions into its lobbying and legal efforts to win the merger, slammed the government’s findings.
The wireless industry “is one of the most fiercely competitive industries in the world.” the company said in a statement. “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.”
Considering the loss of the merger and the new agreements recently struck by Verizon Wireless and cable firms, analysts question the future of AT&T and T-Mobile.
Deutsche Telekom has signaled its interest in ending its investments in the United States and could look for another suitor. But analysts question whether regulators would approve another bid for T-Mobile, given its opposition to the AT&T merger.
AT&T Chief Executive Randall Stephenson said the company would continue to invest in its wireless network. He called on federal regulators to stay out of the way of the free markets and to make more airwaves available to companies that want to bolster their high-speed Internet networks.
“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.