AT&T Bid For Deutsche Telekom Dead
The takeover bid for T-Mobile USA by AT&T Inc. is abandoned for dead, as AT&T withdraws the deal under pressure from regulators. AT&T will take a pretax charge of $4 billion to reflect cash payments and other contributions due to Deutsche Telekom AG, says AT&T.
In August, the Department of Justice sued AT&T to prevent the buyout. AT&T's attempts to convince the government that it could remedy the market share impact failed. T-Mobile is the nation's Number 4 phone operator in the United States. AT&T also faced likely objections from the Federal Communications Commission. The deal would have combined T-Mobile's 33.7 million customers to AT&T's 100.7 million customers, making it larger than Verizon's Wireless' 107.7 million users.
According to the terms of the offer, AT&T must now pay Deutsche Telekom a $3 billion breakup fee in cash and transfer radio spectrum to T-Mobile and contract a more favorable network-sharing agreement. Deutsche Telekom says the failed deal is worth as much as $7 billion.
The climactic fall of this agreement became evident on December 12, when the judge in the Department of Justice lawsuit put the case on hold as the telephone carrier decided how to revive the transaction. The deal closure deadline of Sept 20, 2012 was likely out of reach because of opposition by the federal government.