AT&T's Failed Acquisition of T-Mobile USA

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In August 2011, AT&T and T-Mobile requested the DoJ to withdraw the antitrust suit and allow them to carry on with the deal. But the DoJ refused to change its decision and this prompted Deutsche Telekom to contest the suit. According to DoJ, "AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction's substantial adverse impact on competition and consumers. AT&T could obtain substantially the same network enhancements that it claims will come from the transaction if it simply invested in its own network without eliminating a close competitor."...

AT&T announced that it had officially withdrawn its bid with T-Mobile in December 2011. Experts pointed out that the failed AT&T and T-Mobile deal would leave Deutsche Telekom in a precarious position. According to Philipp Humm (Humm), CEO of T-Mobile, the AT&T deal caused uncertainty for T-Mobile in terms of lost customers, lower customer service rating, and a deteriorating brand. He also said that the company had delayed several other lucrative projects by keeping them on hold when the merger with AT&T was being evaluated. It was reported that T-Mobile had held major negotiations with smartphone and tablet manufacturers like Apple in an attempt to avoid interference with any deals that were to take place between AT&T and those hardware vendors...

Some industry observers felt that the failed merger would limit T-Mobile's ability to lure customers from competitors. Some industry analysts raised doubts over the company's ability to remain competitive given its weak spectrum position and investment compared to its competitors. On the other hand, some experts felt that the spectrum T-Mobile would receive from AT&T could make it attractive for acquisition by any other wireless carrier in the US. However, Humm remained positive about T-Mobile’s outlook and said that the company would enhance its position in the US wireless phone market. Some analysts felt that T-Mobile may not be able to use the break fee to build a 4G network as Deutsche Telekom had to pay back a lot of debt. Critics felt that the break fee was not enough for it to compete with AT&T and Verizon who were making significant investments into their network deployment. Other carriers such as MetroPCS, US Cellular, and Leap Wireless were also planning to roll out their next generation service in their territory, while T-Mobile could not afford to be so widespread in its deployment...

Exhibit I: Timeline on AT&T
Exhibit II: AT&T's Five Year Financial Summary (in US$ millions except per share amounts)
Exhibit III: T-Mobile's Financials (in US$ millions)
Exhibit IV: Timeline of T-Mobile
Exhibit V: Subscribers of US Wireless Carriers (Q1 of 2012)

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