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

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The US wireless industry had been offering telephony services to corporate customers and consumers since the early 1980s. The automated systems that were essential for the wireless services included components such as wireless handsets, antennas and base stations for supporting the radio links to handsets, mobile switching centers, and backend systems for provisioning, customer service, and billing. The major role in the wireless industry was played by standards that facilitated the interoperation of these components...

The history of AT&T dates back to July 1877 when Alexander Graham Bell (Graham Bell) decided to invent a telephone for which he had earned patents in 1876 and 1877. On March 3, 1885, the American Telephone and Telegraph Company (AT&T) was incorporated as a wholly-owned subsidiary of American Bell with the objective of building and operating a long-distance telecommunications network in the US. The company grew over the next century to become one of the top telecom carriers...

Headquartered in Bellevue, Washington, T-Mobile was an American mobile network operator that offered messaging and data services, and wireless services in the US, Virgin Islands, and Puerto Rico. For the FY ended 2011, T-Mobile recorded revenues of US$ 20.61 billion. The history of T-Mobile dates back to 1994 when VoiceStream Wireless PCS, originally a subsidiary of Western Wireless Corporation (WWC), was set up. In 1999, WWC spun off VoiceStream Wireless PCS and set up a public independent company, VoiceStream Wireless Corporation. In 2001, VoiceStream Wireless Corporation was purchased by German telecom giant, Deutsche Telekom, for US$ 35 billion...

While T-Mobile was criticized for its slower growth in the US wireless market, AT&T was often criticized for its inability to keep up with the growing mobile data usage. To fix its network woes, AT&T found a solution - acquisition of T-Mobile. On March 20, 2011, AT&T announced its plans to acquire T-Mobile for US$ 39 billion in a bid to increase network quality and ensure larger savings for the company. T-Mobile on its part, aimed to gain spectrum and network assets from AT&T to offer 4G Long Term Evolution (LTE) services to its customers in the US. The merger was expected to give AT&T a larger spectrum to work with. Also AT&T planned to bring LTE to former T-Mobile consumers...

While the synergies from the acquisition were expected to tackle the woes of AT&T and T-Mobile, the deal met with opposition from several quarters. Soon after the announcement of the acquisition was made in March 2011, Yankee Group conducted an analysis that revealed that the merger would offer better network coverage and high performance for consumers. Yankee Group used the Herfindahl-Hirschman Index (HHI) Index and found that "if the merger goes ahead 17 or 63 percent of the 27 markets would be highly concentrated...

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