Surprise! AT&T Admits Defeat, Withdraws T-Mobile Takeover Attempt, Pays $4 Billion Breakup Fee

from the wow dept

Mon, Dec 19th 2011 6:58pm — Mike Masnick

This is definitely a surprise, but it looks like AT&T finally read all the writing on the wall, and realized it was unlikely to win its fight with the DOJ and FCC and has officially killed its plan to try to purchase T-Mobile... meaning that it now has to pay the $4 billion breakup fee. While the trend of where this was heading was becoming increasingly obvious over the past few months, it's still pretty shocking on the whole. Getting big mergers like this through had become pretty standard, and AT&T (especially) excelled at the political dealing to make such things work. However, the growing public outcry and concerns over the lack of competition that would result seemed to finally have had a real impact.

Filed Under: competition, doj, failure, fcc, lobbying, merger, mobile, spectrum, wireless
Companies: at&t, t-mobile

26 Comments

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Anonymous Coward, 19 Dec 2011 @ 7:00pm

Sadly it was probably weasling by Sprint and Verizon that kept them apart, but as a T-Mobile customer i am happy with the result
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- Skeptical Cynic (profile), 19 Dec 2011 @ 7:09pm
  
  Re:
  As an AT&T customer I am also happy. If they would have been able to buy up the last major GSM based carrier than I only see bad things. IMHO.
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- wnyght (profile), 20 Dec 2011 @ 3:06am
  
  Re:
  why do you say "sadly"? There is nothing sad about this. (tmobile customer as well).
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- Bill, 20 Dec 2011 @ 7:17am
  
  Re:
  Well, I'm doping a happy dance over here.
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Jay (profile), 19 Dec 2011 @ 7:07pm

Another view
Business week has a good take on this. While AT&T thought this would be business as usual, the fact is they raise a lot of alarm bells.

AT&T used the jobs line.
AT&T used blurred math to support the merger.
AT&T used lobbying companies from every part of the US, who didn't see a point in supporting AT&T except for dollar signs.

Let's face it, AT&T was their own worst enemy.
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Spaceboy (profile), 19 Dec 2011 @ 7:16pm

As a former AT&T customer and current T-Mobile one, all I can say is...GOOD.
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Frankz (profile), 19 Dec 2011 @ 7:21pm

Did they "admit defeat"? Or just lie their way out of it, like they tried to lie their way into it? Claim it was a "business decision" to pull out, or due to some vast government conspiracy, everybody's out to get them, or some such crap.

As for the $4 billion they have to pay DT, another article says that will really only cost them about $1.4 billion after a tax write off.
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Steve R. (profile), 19 Dec 2011 @ 7:38pm

Someone is Getting Rich
One has to wonder about the legitimacy of the fees associated with mergers, both with success and failure. I seriously doubt that any of the "facilitators" putting this now failed merger into play actually incurred $4B in billable hours or other valid expenses. The shareholders of AT&T should be screaming.

Just as a casual observer, it seems that corporate managers simply play the merger game as a technique of extracting the corporate wealth into their own pockets. I have no proof, but I have observed too many corporate mergers that seem to fail the smell test.
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- Jay (profile), 19 Dec 2011 @ 7:47pm
  
  Re: Someone is Getting Rich
  After they revealed they didn't need AT&T, it was downhill from there.
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- Anonymous Coward, 20 Dec 2011 @ 4:41am
  
  Re: Someone is Getting Rich
  I think there is more to it than that. Going though a merger you have to expose a lot of your inner workings to each other and part of the fee would be TM's perceived loss after giving AT&T such a close look at their business.
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Jayce, 19 Dec 2011 @ 8:13pm

so, who paid them more?
If AT&T didn't get this through, and considering they current for-hire condition of our government, who paid more? I'm sure it wasn't cheap at all. Sprint probably didn't have the cash, so, who?
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- Larry, 19 Dec 2011 @ 8:33pm
  
  Re: so, who paid them more?
  Not so much that someone else paid more but more likely that ATT didn't pay enough for their political partners to take the heat.
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Coach George (profile), 19 Dec 2011 @ 8:30pm

Surprised? Really???
With all of the negative press and govt. conversation, not to mention the lobbying by Verizon and Sprint are you really surprised?

IMHO, a good decision.
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ShellMG, 19 Dec 2011 @ 8:43pm

Congrats to TMO customers. I lobbied against it because I was an Alltel customer swalllowed by the VZW juggernaut and saw my terrific speeds get flushed. AT&T is notorious for a reason.
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TEA-Time, 19 Dec 2011 @ 8:52pm

I bet that stings just a little bit more than when the wife gets to keep the house...
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techit989 (profile), 20 Dec 2011 @ 12:28am

political dealing of AT&T
I also think that you are saying right AT&T excelled at the political dealing to make such things work.
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Anonymous Coward, 20 Dec 2011 @ 3:58am

Being a X-Employee of AT&T I have to say this is good for customers of T-Mobile. AT&T cares only about one thing. $$$$ They don't care about their employee and they certainly don't care about their customers.
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Howard the Duck, 20 Dec 2011 @ 4:00am

Blast
I own stock in AT&T, I wanted to own T-Mobile too. I wanted to be part of the 1%. Oh well, back to the park.
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Jim, 20 Dec 2011 @ 4:50am

Who really won here?
I see a lot of hi-fives and such and wonder who really won?

DT is still not going to build up T-Mobile (no matter who tries to make them).

AT&T is not going to increase their build outs (cost too much, with too much regulation).

Customers on both sides still have crappy service (lets be honest T-Mobile sucks...and yes I can say that as a customer).

So who really won here? Nobody.
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- Coach George (profile), 20 Dec 2011 @ 5:01am
  
  Re: Who really won here?
  I disagree, ATT will continue their build out inorder to remain competitive with Verizon.
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Anonymous Coward, 20 Dec 2011 @ 5:04am

... ATT will continue their build out ...

They have to start first.
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Anonymous Coward, 20 Dec 2011 @ 5:48am

Man, if *I* had a breakup fee I could retire early already...
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Anonymous Coward, 20 Dec 2011 @ 8:16am

I think people are downplaying the significance of the huge early-termiantionf ee AT&T will be forced to pay. Four billion?!! I mean, that's gotta be, like, almost as much as the ETF AT&T will charge me for breaking my contract early. (I think it's in the fine print there somewhere.)
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iBelieve, 20 Dec 2011 @ 9:57am

Nothing they do seems to limit public outcry
Like where will they make up this $4B if that is really a true cost to them? From the public, that's where. They will in all likelyhood lash out with higher prices for smaller candy bars, that's all. Greed goes against the public good when they do not tell customers of usage overage commits and charge an unconscienable amount for them. Still, they waited for legislation against that practice before they stopped.
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rudie32, 20 Dec 2011 @ 3:42pm

Don't forget...
Don't forget at&t has to give t-mobile a wcdma (HSPA) roaming agreement with t-mobile usa now! HUGE expansion of 3g and higher coverage now with t-mobile! As a t-mobile customer with all my phones supporting all of at&t's 3g and HSPA+ bands, im thrilled!
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Steve, 21 Dec 2011 @ 10:08am

AT&T T-Mobile failed merger
Credit should go to the Obama administration for opposing what would have become the largest cell provider in the USA.
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