AT&T And T-Mobile Drop Merger Plans, Look To Roaming Agreement

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News Posted: Mon, Dec 19 2011 5:36 PM
Know what it feels like to lose $5? How about $100? How about $4 billion. That's the write-down that AT&T is going to have to eat, and that's the size of the check that Deutsche Telekom is going to cash. After many months of lobbying every organization under the sun to green-light the AT&T / T-Mobile USA merger, both companies have today announced that they're giving it up. There will be no merger, at least not this year. At first, it seemed that this merger was destined to happen, but as the U.S. government began to balk at it, the likelihood became less and less. Now, it's just a memory. The only good thing coming from all of this? AT&T and T-Mobile have agreed to a roaming agreement, but details on that remain unclear.

AT&T Ends Bid To Add Network Capacity Through T-Mobile USA Purchase

Company Reaffirms Its Commitment to Mobile Broadband Leadership

Dallas, Texas, December 19, 2011

AT&T Inc. (NYSE: T) said today that after a thorough review of options it has agreed with Deutsche Telekom AG to end its bid to acquire T-Mobile USA, which began in March of this year.

The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage.  In the absence of such steps, customers will be harmed and needed investment will be stifled.

“AT&T will continue to be aggressive in leading the mobile Internet revolution,” said Randall Stephenson, AT&T chairman and CEO.  “Over the past four years we have invested more in our networks than any other U.S. company. As a result, today we deliver best-in-class mobile broadband speeds – connecting smartphones, tablets and emerging devices at a record pace – and we are well under way with our nationwide 4G LTE deployment.

“To meet the needs of our customers, we will continue to invest,” Stephenson said. “However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC.  Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs.

“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” Stephenson said.

To reflect the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011.  Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom.

*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
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Good news indeed.

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LLeCompte replied on Mon, Dec 19 2011 5:59 PM

Feels so good to have job security again! at least for now. Hopefully dish net work can buy Tmo now. Its a good day indeed!

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Definitely good news for the consumers.

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rapid1 replied on Mon, Dec 19 2011 8:11 PM

Yay; I get to keep my chosen (for now), cellular provider (T-Mobile), for my remaining 16 months (and they let subscribers upgrade early).

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rapid1 replied on Mon, Dec 19 2011 8:12 PM

Oh yeah and my provider gets 4 billion for nothing which will hopefully mean system/internal upgrades:)

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rapid1 replied on Mon, Dec 19 2011 8:14 PM

Oh and the reason for the roaming agreement is also part of there (Deutche Telecom's) requirements to consider the merger. All together I believe T-Mobile gets around 7-7.5 Billion total but some of it is in bandwidth, back haul, and spectrum while 4 Bil is in cash.

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jonation replied on Mon, Dec 19 2011 8:25 PM

lets hope they spend their money on the network

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AKnudson replied on Mon, Dec 19 2011 8:50 PM

wow really guys just stifling the biggest breakthrough in wireless technology or atleast service we have had in years. oh thats not that much. I hate you congress.

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DDeveaux replied on Mon, Dec 19 2011 9:03 PM

The merger would have hurt competition (more specifically, competition for HSPA providers). AT&T could easily raise prices, since there wouldn't be any other major HSPA provider (Verizon & Sprint's CDMA network doesn't count in this regard, since it's quite a bit slower than HSPA, and you can't call/text at the same time.

Yes I know everyone is talking LTE now, but the majority of subscribers will still be on 3G networks for quite some time to come.

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