AT&T to pay $3bn for failed T-Mobile USA bid
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Telecommunications giant to pay huge break-up fee and hand over mobile spectrum after regulatory opposition derails $39 billion acquisition attempt
US telecommunications giant AT&T has pulled out of its bid to buy T-Mobile USA, the North American mobile division of Deutsche Telekom.
The companies said that opposition to the deal from both the US Department of Justice and Federal Communications Commission (FCC) "is making it increasingly unlikely that the transaction will close".
However, they added that arguments in favour of the deal, such as improved mobile network performance and "positive employment effects", had been ignored.
As part of a pre-agreed termination clause, AT&T will now pay Deutsche Telekom a $3 billion break-up fee and give it "a large package of mobile communications spectrum and a long-term agreement on [mobile] roaming within the US".
Deutsche Telekom said this was "one of the highest payments ever agreed between two companies for the termination of a purchase agreement".
When the Department of Justice raised its objection to the deal in September 2011, it said the deal would be especially damaging to competition in the enterprise and government markets, because although T-Mobile is not a significant player in these markets, it had previously announced plans to grow sales to public sector organisations and large businesses 'significantly' by 2013.
AT&T's bid for T-Mobile USA was seen as a return to the days when the US telecommunications market was dominated by the conglomerate of the same name. Those days ended with the seminal proceedings in the early 1980s when AT&T was broken up into regional telcos.
The company known as AT&T today is the result of one those regional telcos, Southwestern Bell Corporation, acquiring 22 other "Baby Bells".
