Game over for AT&T’s acquisition of T-Mobile USA?
31 August 2011 |
Following months of intense speculation, the US Department of Justice has appeared to deliver a blow to AT&T’s proposed $39 billion acquisition of T-Mobile USA.
Reports are coming in that the department filed court papers in Washington today that are attempting to halt the acquisition based on antitrust grounds. It reportedly stated in the filing that: "AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market."
Plans for the merger, which could drastically alter the shape of the US telecoms industry by making a new market leader, were first announced in March. Since then, fierce opposition has been mounted to the potential move by competitor Sprint, the US public-interest group Consumer Watchdog and even AT&T customers.
Just last week, the Federal Communications Commission (FCC) requested that AT&T provide details on the rationale for its bid following the accidental public disclosure that it could have extended its own cellular services for a fraction of the T-Mobile purchase price.
Ovums chief analyst Jan Dawson has said this latest opposition from the DoJ has significant merit and will create a massive uphill battle for AT&T in consummating its merger, and will create significant delays.
At worst, it will prevent the merger from happening entirely, which will result in a massive breakup fee of several billion dollars and various other concessions on the part of AT&T. The uncertainty created in the meantime poses several very difficult decisions for AT&T, especially in terms of network investments, he said.
It will have to decide whether to press ahead with its own LTE rollout on the assumption that T-Mobile's network assets and spectrum will eventually be part of it, or whether to pursue another strategy for rolling out 4G.
The Capacity editorial team has been closely monitoring the story and will be sure to report on anymore developments as and when they unfold.