• AT&T Pulls Plug on Fateful T-Mobile Bid

    AT&T is dropping more than just calls today. It has also dropped its high-profile and highly-suspect $39 billion bid for T-Mobile USA.

    Late Monday afternoon, the second largest U.S. mobile operator announced that it is effectively giving up its initial plan to gobble up T-Mobile as a direct result of seemingly insurmountable opposition from U.S. federal regulators.

    Consequently, there's a hefty price to be paid by AT&T for the botched merger attempt. AT&T must now pay $3 billion in cash and turn over a portion of its wireless spectrum to T-Mobile owner Deutsche Telekom AG. As we understand it, this move represents AT&T meeting its contractual penalty for failing to complete the acquisition.

    Aside from the cash and spectrum, Deutsche Telekom is also getting a "mutually beneficial" roaming agreement from AT&T.

    Deutsche Telekom said it will return to reporting T-Mobile USA as part of its continuing operations and that its group forecast for 2011 of an expected earnings before interest, tax, depreciation and amortization (EBITDA) of around 19.1 billion euros ($24.86 billion) would remained unchanged.
    Clearly, this merger was stymied long ago by the US Federal Communications Commission and the U,S, Department of Justice, as both vocal critics argued that the merger, if sanctioned, would result in a loss of market competition and even more substantial job layoffs.

    Source: Reuters
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