[December 19, 2011] 2ND LEAD: AT&T abandons T-Mobile deal in US Tweet Dec 20, 2011 (dpa - McClatchy-Tribune Information Services via COMTEX) -- SAN FRANCISCO -- AT&T abandoned its 39-billion-dollar deal to buy US cellphone carrier T-Mobile Monday, citing the opposition of government antitrust regulators. In a statement, AT&T said it had ended discussions with Deutsche Telekom, the owner of T-Mobile, over what would have been the biggest corporate deal of the year. The announcement came more than two weeks after the Federal Communications Commission said the deal, which would have united the second and fourth largest carriers in the US, would have harmed telecommunications customers by raising prices. With the collapse of the deal, AT&T is obligated to pay Deutsche Telekom a compensation package of some 3 billion dollars, plus an additional 1 billion dollars worth of wireless spectrum. The company said it would take a pretax accounting charge of 4 billion dollars to reflect the penalty fee. AT&T said in its statement 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." AT&T noted that the deal would have solved the spectrum shortage that is hampering the development of the US cellphone industry, and that without the merger, "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. "To meet the needs of our customers, we will continue to invest." Observers said that AT&T and its investment advisors had badly miscalculated the degree of government opposition to the deal which would have created the largest US carrier with over 100 million customers. Together with Verizon, the new company would have controlled 75 per cent of the US cellphone market. AT&T had argued that the increased spectrum would have resulted in lower prices, better service and more jobs. But the FCC report found that T-Mobile's role as an innovative, lower-priced alternative to its larger competitors would be badly missed and lead to higher prices and less competition for customers. The deal leaves Deutsche Telekom in a tough position as T-Mobile continues to shed customers and demand large investments for new services. T-Mobile is also the only one of the big four US carriers not to sell the iPhone. However, other companies, such as satellite TV provider Dish Network, have said they would be interested in buying T-Mobile if the deal with AT&T fell through, while the break-up package could help solve T-Mobile investment issues. ___ (c)2011 Deutsche Presse-Agentur GmbH (Hamburg, Germany) Visit Deutsche Presse-Agentur GmbH (Hamburg, Germany) at www.dpa.de/English.82.0.html Distributed by MCT Information Services [ Back To TMCnet.com's Homepage ]