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AT&T / T-Mobile Merger Hits A Justice Department-Sized Snag

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News Posted: Wed, Aug 31 2011 11:34 AM
Well, this isn't looking good for those already planning to attend the marriage of T-Mobile USA and AT&T.

While it was starting to look as if the proposed merger would end with the two holding hands and riding off into the sunset, things have taken a dramatic turn today. The U.S. Department of Justice filed court papers in Washington to block the $39b acquisition, suggesting that the deal would "substantially lessen competition" in the market. Not surprisingly, AT&T's shares dropped 5 percent.

That's probably because AT&T will be forced to pay T-Mobile's parent company (Deutsche Telekom AG) a staggering $3 billion if this doesn't go through, and would need to sell a ton of iPhone plans to make up that loss. The filing said the following: "AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market." This isn't the end of the journey, not by a long shot, but it's clear that AT&T has a battle on their hands now.


Despite promising that 5000 U.S. jobs would be created if the merger happened, other reports suggested that T-Mobile was already preparing severance plans in case things worked out. Either way, this shows that the government is indeed paying attention, and that antitrust law is still a big deal.
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detnight replied on Wed, Aug 31 2011 1:21 PM

Great, I do not want to lose my T- Mobile. I have had TMobile since they were two companies or name changes before T- Mobile.

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Super Dave replied on Wed, Aug 31 2011 2:35 PM

(Front page click HERE to see YouTube history of AT&T explained)

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ThunderBird replied on Wed, Aug 31 2011 2:43 PM

This is great news, again I am with AT&T and am totally against the merger.

You talk about a monopoly if this were to be allowed.

Way to grow a pair DOJ. Bravo indeed.

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rapid1 replied on Wed, Aug 31 2011 5:38 PM

This was forwarded to me earlier today and of course I posted it shortly thereafter it started coming into my email from other places (I originally got it from Sarah). This is good as the whole thing is it is so true At&t was just trying to kill some competition and there was no real reason for them to take over T-Mobile other than killing competition.

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AKwyn replied on Wed, Aug 31 2011 7:12 PM

This was mostly expected. Tons of people are against this merger and it was only a matter of time before the Justice department said that this merger would hamper competition.

In any case, I can't wait to see how this unfolds.

 

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omegadraco replied on Wed, Aug 31 2011 7:36 PM

Hmm a 3b dollar infusion into T-mobile... What will that mean for that company that is the question. I am sure a huge portion of it will go to bonuses...

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Super Dave replied on Wed, Aug 31 2011 9:45 PM

omegadraco:
Hmm a 3b dollar infusion into T-mobile... What will that mean for that company that is the question.

How much is AT&T going to up it's rates to pay that $3B - that is the question!Stick out tongue

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realneil replied on Wed, Aug 31 2011 11:05 PM

Super Dave:
How much is AT&T going to up it's rates to pay that $3B - that is the question!

Yeah, those buttheads throw money around like ~we've~ got it or something!!

Virgin Mobile-Pay as you go. 'nuff said,.....Smile

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CDeeter replied on Wed, Aug 31 2011 11:49 PM

$3 billion? Ouch! That's gonna leave a mark!

Not a great time to be losing that kind of cash.

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rapid1 replied on Thu, Sep 1 2011 2:15 PM

"if the merger falls through AT&T still owes T-Mobile $3B USD in cash, $2B USD in spectrum, and $1B in roaming coverage"

Looks more like 6 billion and I thought the cash was 3.8 billion as well so closer to $7 billion which will at the least pinch a few hundred bonuses.

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pjnissim replied on Mon, Sep 5 2011 1:24 AM

It'll be interesting to see how this shakes out.. very interesting

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