AT&T agrees to drop bid for T-Mobile

By Ryan Nakashima

Associated Press

Published: Monday, Dec. 19 2011 3:35 p.m. MST

LOS ANGELES — AT&T Inc. said Monday that it is ending its $39 billion bid to buy T-Mobile USA after facing fierce government objections.

The cellphone giant said that the actions of the U.S. government to block the deal do not change the challenges of the wireless phone industry, which it says requires more airwaves, known as spectrum, to expand.

The deal would have solved that problem for a time, and without it, "customers will be harmed and needed investment will be stifled," AT&T said in a statement.

It called on the government to quickly approve its purchase of unused spectrum from Qualcomm Inc. and come up with legislation to meet the nation's long-term needs.

AT&T, the second-largest U.S. wireless carrier behind Verizon Wireless, faces paying Deutsche Telekom $3 billion in cash and may have to enter into a roaming agreement with Deutsche Telekom, while transferring it the rights to spectrum it doesn't need for the rollout of its planned, next-generation "4G" network.

AT&T's purchase of T-Mobile from Deutsche Telekom of Germany would have made it the largest cellphone company in the U.S. T-Mobile is currently the fourth-largest.

The Justice Department sued to block the merger on Aug. 31, saying it would reduce competition and lead to higher prices.

Last month, the companies withdrew their application to the Federal Communications Commission after its chairman also opposed the deal.

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